State of the Industry Podcast: “That’s why this time it’s completely different” – Audio Transcript

Scott: Welcome to Allworth’s “State of the Industry” podcast, Scott Hanson here. Glad you are joining us. We’ve got a great interview today. We’re gonna hear a little bit about the journey that, you know, advisors go through as they’re considering partnering with somebody or selling their business, kind of that journey that they might go through. So, Keith DeGreen is joining us, and we’re gonna hear from Keith in his own words, his kind of, his story of his career and how he became part of Allworth. So Keith, thanks for taking some time today.

Keith: Oh, thank you so much. I appreciate this opportunity, Scott, and congratulations on what you and the entire Allworth team are accomplishing.

Scott: Well, thank you, Keith. And by the way, so I first heard of Keith, I don’t know, was this maybe almost maybe 30 years ago. You had some cassette tapes that I got from somewhere, or, and you talked about a bit of your story and you gave some advice for advisors and it was helpful. I don’t even remember where I got the cassettes, but or if you partnered with them.

Keith: Well, you might have gotten…you might have gotten them from Pat, because I understand he bought a complete set of my cassette tapes way back in the day when I used to make my living as a motivational and sales trainer. And, you know, I would blow into town and give my speech and sell my books and tapes and get out of town before the posse formed.

Scott: That’s cool.

Keith: And it was a great experience and hopefully I helped some people.

Scott: That’s what they were then. Yeah. Well, here I am. So, and I have to give all the credit to you, Keith, and what I learned in those tapes. I’m sure they were helpful because I remember. One of the things I actually remember is you stated something in fact that your, you know, you lived in the greater Phoenix area and your house was up on a hill and you had a view overlooking the city, and you said that you liked that because it reminded you that it was all these people that you served that helped you to get the place that you had.

And it was a reminder of you to you that you need to continue to serve people well and you know, if you help enough people, things are gonna work out for in your favor. And I think that was the one takeaway I had.

Keith: Well, that is so true, Scott. I mean, look, we’ve been, and as usual, it was not a straight up trajectory. When Allworth bought DeGreen Capital Management, it was the second investment advisory firm that I had sold. And, you know, you go through all kinds of bumps and grinds and, you know, as the old saying goes, I’ve been broke and I’ve been rich, and rich is a lot better. And but it keeps you humble and you realize that there’s a lot of people out there working very, very hard to accomplish their financial goals. And if you have worked hard and acquired the qualifications to be able to help them and the skill and the experience, that is very gratifying work.

Scott: Yeah. And so DeGreen Capital Management, you started that when?

Keith: Well, I actually flunked retirement. I had sold a company called DeGreen Wealth Management in 2006 and then I bought a boat. I thought I was gonna retire. I sailed that boat across the Pacific, actually, broadcast our radio show from the middle of the Pacific. It was a lot of fun. Came back and…

Scott: And how long were you on your boat?

Keith: I was only on the boat for about a year.

Scott: Only?

Keith: About a year.

Scott: How big a boat was this?

Keith: Well, it was a 55-foot Nordhavn, which is a full displacement trawler. We got as far as toward Bangkok. And by then I was so far over budget and behind schedule that I doubled back to Hong Kong and the very nice people at Nordhavn helped me sell it. And I came back to the real world.

Scott: That’s funny.

Keith: Then not long after that, my non-compete, I had a three-year non-compete with the folks who had bought my previous firm that expired and I immediately got a call from my old radio station because that’s how we had built our business is through radio. And they said, “You wanna,” I mean, literally the day after my non-compete expired, they were tracking it, “You wanna get back on the air?” I said, “Well, yeah, actually I do.”

So we were living in Ohio at the time. I received a kitchen pass from my lovely wife, Lynn, and I started commuting back and forth to Phoenix and we built DeGreen Capital Management. And it was built as a fee only fiduciary advisor. We focused entirely on building portfolios of exchange-traded funds, ETFs, and we were quite successful at it. And we had about, I don’t know, what was it, 320 million under management at the time that you guys came along and said, “Hey, we’ll buy that.” And there you have it.

Scott: So well, I don’t know, it was quite that, we just showed up one day and you’re like, “Yeah, why not?” No. So how…

Keith: Your timing was impeccable. You know, sometimes the timing is great, sometimes it’s not. And I took a look at what you and Pat were offering, and I thought, you know what, this is a good fit.

Scott: And what was the primary motive? So you, I’m imagine you talked with other firms besides Allworth. What…

Keith: Oh, we did.

Scott: Yeah. And so what was the trigger in your life that you thought maybe it’s time for me to look at selling or partnering or like what was…?

Keith: Well, as we speak, I am 73. I realize I don’t look a day over 72 and three-quarters but, you know, getting older and I look around and my son Sam is just killing it right now. I’m sure you’re…

Scott: I agree.

Keith: Monitoring him. You’re monitoring his numbers.

Scott: You guys have brought in a lot of assets this year.

Keith: Oh, he’s been remarkable. He just texted me a moment ago and said he brought in another 1.5, and that’s just him. I mean, he has the selling gene, you know, and he’s a good solid advisor as well. A good solid planner. So anyway, I had Sam in the business, he was getting well settled. We have a good team there in Phoenix. And I thought, you know what, it’s time. It’s time for me to start looking around. And of course you wanna find a home where your clients are gonna be well taken care of.

In honesty when I sold my first firm, it was to an aggregator, not to an integrator. Allworth is an integrator. And it was to an aggregator. It was more interested in just accumulating assets. And they crashed and burned within a year after they bought our firm.

Scott: What do you mean by that? Because you’ve said that before, but I’m like, what happened to them?

Keith: They went out of business. They dissolved. And I don’t know whether the remaining the planners that got left behind at various firms were able to buy back their book of business or what, but the company itself ceased to exist. I think it stopped receiving its, you know, its private funding. Its investors wanted out. You know, its big investors wanted out, so they liquidated, and that was the end.

And so when I met with Allworth, one of my first concerns was, I do not want this to be a repeat of that. I happened to have done okay. You know, they paid me, the check cleared and I was off to the races selling my boat, but I felt horrible for my clients. I felt horrible for the team I had left behind because there were a number of very good planners in our firm, and I felt terrible for them. So I was a very suspect when anyone approached me, including Allworth, and it took a lot of due diligence for me to satisfy myself that you guys were the real deal. That you had a game plan, that you were very client-oriented and that you had the financial backing and that you were doing it right. You were doing it right.

Scott: And so now that it’s been, you joined us, what was it, December of 2021?

Keith: No, I joined you in on November 1 of 2021. And as we speak, therefore we happen to be about, what, 60 days away from the end of my, what’s called my clawback period. I mean, once again, you guys have been very supportive and we’ve met our targets there very well, you know, that we exceeded our targets there. And therefore the ultimate, the final compensation, fully compensated already, but there’s a portion that gets withheld as with any sale. And until we confirm that assets have stuck around, which is a completely fair arrangement, and it happens that not only did our assets stick around, but we substantially increase those assets. So it’s worked out very well for you, for us and so successfully for our clients.

Scott: Yeah. And so knowing that you’re joining an integrator, which is a firm that’s going to take other firms that join and blend them together, right, so that the like, and you knew there’s some positives to that and also some negatives. Like what’s the harder? So you’re 73, you created this awesome business, your son’s working for it, you sell the Allworth, you still have some equity, but like what’s challenging about this for you now?

Keith: Well, Scott, for me personally, now, I’m I guess you would call me a short time or an exhausted rooster. In a few months, I’m gone. You know, that’s all part of my retirement plan and you guys have in my particular case, very cooperative in helping to make that happen. So at the beginning of 2023, I will be officially retired. You guys are gonna cash me out and life goes on. And, which I think is great.

And you, you know, you’ve acknowledged that I’ve done my best, but that it’s time to on. In terms of the challenges that I think that I see our staff deal with, because it’s really more them than me. Because with each passing day, I am more hands-off. It is sometimes, and we understand this, the emphasis of process over purpose. At least that’s how you perceive it when you’re an independent firm that feels it’s totally wired and it knows exactly how to bring people in, service them and keep building your firm.

When you’re large, you guys have the challenge of integrating and standardizing the process of bringing people in. And sometimes I know our staff and my son Sam kind of trips over those and says, “Well, why can’t we do it this way? Why can’t we do it that way?” And I think that what’s gonna happen over time is that you’re gonna take the best ideas from the firms with whom you work. You’re going to acknowledge that you’ve got a large organization that you need to integrate, and it’ll all come out fine because you guys are receptive, you’re smart, you’re savvy, you’re experienced, and you understand that ultimately, it is all about attracting and then serving our clients.

Scott: Yeah. And then having great people to help us do that, right? I mean, it’s very much a people business.

Keith: Right. Oh, very much.

Scott: Yeah. And it’s interesting. So I think if I look at the organization now, like many people on our leadership team came to us through some of our partner firms that joined us. And…

Keith: Well, that’s, you know, may I point out, Scott, when someone joins Allworth, they really have three different paths that they can pursue. The first is, you know, they have a liquidity event, they’re an owner, they have a liquidity event, and now they say, “Hey, I just need to maintain my book of business. Hopefully, I’ll get some referrals. Allworth does some marketing. I’ll grow generically, and it’s all good.” That’s perfectly fine.

The second category are those folks who join Allworth, they maintain a book of business, but they also look at the opportunities within Allworth and they say, “Hey, I wanna grow within the organization itself. I wanna be challenged to take a leadership role in that organization.” And I think that’s wonderful and you see folks like that throughout the organization, successful advisors who have also taken on the role of being important players within the corporate structure of Allworth.

Scott: Yeah. Matter of fact…

Keith: The third category.

Scott: Go ahead.

Keith: Category of guys like me who we’re just, we’re one foot out the door. We’re saying, “Thank you so much, good luck and God bless you.”

Scott: Yeah. Well, yeah, it’s not quite that way. You’re being very helpful on the transition part, but it’s like it’s, you were talking about like the second one, the ones people join us. And I think oftentimes people don’t really know what they want until they see some opportunities. But the gentleman who heads up our whole integrations team, he came to us through a merger out of our Houston office. And originally all he said, “All is I wanna do is just serve my clients.” And he was running the business before. And so after once he joined us, he said 70% of his workload was no longer his responsibility. So he had all his free time. He said, his wife was like, “Hey, buddy, what the heck are you doing home all the time?”

And anyways, as time went on and I talked to him, I said, “I just I think you’re really talented and you have a lot to offer this industry.” And so now he heads up our whole integrations team. And I had a conversation this morning, he says to me, because I was just seeing how you’re doing because it’s not easy. And as you go, as you know, Keith, you go through an integration’s not easy because have people like, “Why in the world do we have to do it this way? This way works fine and we’ve worked on our own processes, What’s wrong with our process?” All that stuff.

And he said to me, “I love this challenge.” He’s like, “No one in the industry’s really figured this out yet.” And he says, “I wanna figure it out like.” So, you know, and it’s just kind of one example on that.

Keith: Well, I think we’re talking about our friend, Chris. And he just he just does a marvelous job. He just does a marvelous, and he is not unlike many of the talented people that you have brought onboard who were successful advisors. So that is an avenue, you know, that is an avenue for those folks who want to be more involved in the corporate part of Allworth and of Allworth’s growth. And you guys are going great guns and with your acquisitions are quality companies, it’s all good.

Scott: And so what advice would you give someone else, let’s say someone who’s getting, maybe they’re just getting, maybe they’re retirement age, but not quite, they’re not certain if they wanna retire and they maybe they have another couple chapters or not, what would you advise them to do?

Keith: Well, you know, I wasn’t sure of what I wanted to do either. When we sold our firm to Allworth, I didn’t know if I wanted to hang around for a few years. I didn’t know if I wanted to cut the cord. And what our in spirit of Allworth provided me was insight into, first of all, it provided me with obviously a significant amount of liquidity. And from that position, I’m able to look and see at all the changes that are about to occur. Being older, I can say to myself, “You know what? I’ve been there, done that. I know that it’s good stuff, but maybe it’s time for me to move on and let these youngsters do what they’re gonna do.”

So for the somewhat older investment advisors contemplating the sale of their business, you don’t really have to know for sure what you wanna do. You’re probably gonna have a year or two of a clawback period where you gotta stay focused, make sure you maintain your book, and that’s healthy and that’s good. That helps ensure the success of the company and of the value of the shares that you might end up owning in Allworth for a while. And you’ll have some time to kind of reflect on sky.

It was not until just the other night, my wife Lynn and I were celebrating our 38 anniversary. We were out to dinner and we got talking about it and she just looked at me and said, “You need to call it quits. You need to move on.” And she as usual, she’s right. I hate to admit that, but she’s right. And so here I am celebrating the fact that within a few months now I’m dust and it’s all good.

Scott: Well, you plan on doing any more sailing?

Keith: Well, yeah, actually I might do an aspirational podcast from my boat. I’m out shopping for boats right now sailing.

Scott: Oh, you are?

Keith: Yeah. And, you know, nothing where I saw investments, obviously. That day is done, but I’m looking forward to something like that. As you know, I enjoy I’ve been broadcasting for many, many years. I enjoy speaking, I enjoy broadcasting. So I’m gonna find something to do that at least lets me deduct the effort and we’ll see how it goes. We’ll see how it goes.

Scott: Well, cool. Well, Keith, I’m certainly glad to know you and glad to have you as a partner and certainly wish you all the best and I greatly appreciate you taking a little time to have a conversation with us today.

Keith: Well, Scott, you guys are a quality act. Anything I can do to help support you, I’m happy to do it.

Scott: Thanks so much Keith. And hey, thanks everyone for listening today. If you found this was informational, you’d like to learn more about Allworth, go to our website, allworthpartners.com. It kind of talks about the journey that folks go through as they’re looking at doing a merger or acquisition. And anyways, thanks so much for this and enjoy the rest of your day.

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