State of the Industry Podcast: “When the Success of your Advisory Firm Takes Over Your Life” – Audio Transcript

Scott: Welcome to the “State of the Industry Podcast.” I’m Scott Hanson of Allworth, glad you’re taking a little bit of time and I think today’s program you’re gonna enjoy because obviously there’s been tremendous amount of M&A in our industry this year, recording of this is the end of 2021. We hit record years… I think we hit record early on in the year, which has been a phenomenal year. And we’re gonna highlight basically a firm that chose to partner with us during this last year and hear a bit of his story. Chris Giordano, of Giordano Wealth Management in Northern California, basically kind of Silicon valley area, joined us this past year. So, Chris, thanks for taking a little time.

Chris: Absolutely. Glad to talk with you this morning.

Scott: Chris, maybe you can describe what your practice, your business looked like prior to becoming a partner at Allworth.

Chris: Well, prior to becoming a partner at Allworth I was running my own independent firm. We were really set up to do financial planning, first and foremost, and then portfolio management that we integrated with financial planning for our clients. And I had that practice for about 11 years. We started off essentially at zero and over that 11-year period, we grew the business to roughly $315 million under management. A very successful practice, very fulfilling, great client base.

Scott: How did you get into the business at 11 years ago? How old are you, Chris? Mid-50s? Early 50s? Late 40s? Thirty-eight? You don’t look past 38. That’s what I meant.

Chris: Yeah. I was wondering where you were gonna end up there. So, I’m 56 right now, but I’ve actually…I’ve been in the business a lot longer than 11 years. I’ve actually been in the business about 32 years, which is kind of crazy to think about. But for 20 of those years, I worked at large institutions. I was very successful but over time, I became more and more disenchanted with the agendas at the institutions where I was working, the politics, the layers of complexity around management and everything else that really detracted from my ability to do my job and to put clients first all the time. So, I left the institutional world and I went independent in January of 2010. And the objective was to be able to run my business the way that I thought was best, to be able to make decisions that were in the best interest of my clients, not the firm necessarily, and to work for myself.

So, that’s what I did, which was terrific. Actually, it was so terrific that the business grew and grew and grew. And what happened over time is I ended up having two full-time jobs, essentially. One of those jobs was being a financial advisor and taking care of clients, but the other job was running the business itself. And initially, when we first started, that was manageable. But over time, as we got bigger and bigger, everything got more complicated and I was spending more and more on my time running the practice and having less and less time for clients. And that became a problem for a number of reasons.

Scott: And you’re in a town called Los Gatos. A lot of history. It’s a cool little town. You’re what, third-generation people in Los Gatos?

Chris: Well, I think probably second. My grandparents immigrated from Italy, so technically, I think I’m second generation here. Yeah.

Scott: Okay. But there’s a lot of… You’re like a pretty known family in this little town and you’ve just done a great job of being kind of the town financial advisor. It’s a very wealthy town too, right? And which helps. And you’ve just done a fantastic job of picking up clients based upon the great service you provide people and based upon your personality.

Chris: Well, yeah. You know, I have a large family in town, so people know my name. We built the practice primarily through referrals and some of that was because of my history in the town. But honestly, I think it’s mostly because we just we had a very high service standard for clients and we, you know, we care about all of our clients. We just did a really good job for people and they appreciated that and we get referrals like crazy. We still do.

Scott: And you joined Allworth July of this year. What was the process? What’s kind of interesting now, I mean, as I’m hearing you talk, we were in this large institution, you didn’t like some of the bureaucracy of the institution. You’re like, “Ah, I need to get outta this in [inaudible 00:05:35]. And frankly, this is how most advisors get into business for themselves. It’s not because they got this huge desire to run a business. It’s just that they don’t like the environment they’re in and don’t see anything better and so they just create their own, but you went almost full circle. I mean, we’re not a huge institution, but we’re still a little institutional. So, what was the process you went through the last year or two to thinking, “I’m wearing two hats now, how do I get back to that one hat and…”

Chris: Well, yeah. So, it’s funny you asked me this question because when I went independent, you know, I swore I’m never working for anybody ever again. I’m my own boss and that’s the way it’s gonna be forever. But my plan always was to sell or transition my practice to another advisor who was my successor and then eventually retire. But I wasn’t ready to do that yet. And honestly, when I started to look at Allworth, my original thought was, “I’ll take a look at this firm. I’ll see what they think my practice is worth, but I’m not gonna do anything because I’m not ready. I’m just not psychologically and emotionally ready to not own my own practice anymore.”

So, the initial investigation of Allworth was just to kind of get a feel for who they were, what they were doing and see what they thought my practice was worth. And what ended up happening is I went through that process, I had this sort of epiphany in a way where I started to realize that in actuality I was ready to do this. I didn’t think I was, but the more I talked with Allworth about their firm and about what they were doing, the more that I realized it was actually a really good fit for me and my clients. And not only that, but it was the right time to make the decision.

Scott: And had you talked with… Had you had other internal successors lined up previously or…

Chris: Yeah. So, I’ve got a good friend who’s an advisor here close by and he has a practice very similar to mine, not only in size but in approach and the sorts of services that he and I both provide to clients. So, he and I were each other’s successors. That was the plan. But, you know, he’s about my age too. And again, I started thinking, “All right. If I do this in five years, is he gonna be my guy in five years?” So, there were a lot of things that just…

Scott: For 10 years, right? Yeah.

Chris: Yeah. Whatever it was. You know, and again, I started looking at all of the time and all of the things that were consuming my time that went into running the practice and it was shocking. I was spending probably 60% of my time running the business and 40% with clients and it was getting worse. And that was sort of eye opener.

Scott: Had you considered, I mean, because you’re kind of at…it’s interesting as business goes through different phases, right? And you get to a certain point, you’re like this level of complexity where you’re thinking, “I need to do something,” because you didn’t like spending time running the business. So which means you either bring in someone really strong to run the business or do something different. And you bring in someone pretty strong, there’s a significant salary component, takes a short-term hit on profitability and then you’re looking at another few more years I would suppose to ramp back up. Right?

Chris: Well, right. So you’re exactly correct. We were at this point, this critical mass, right? Where in order to continue to grow and to continue to operate and improve our ability to stay relevant and competitive in this industry, we needed to do something and it was something major. Bringing on a business manager or additional staff that I could then delegate to and free up some of my time and capacity. But that endeavor, doing that was really a significant undertaking for a lot of reasons. The cost factor was one, but the training, the onboarding, the, you know, how do you share an equity and ownership? All of these things just were very complicated. And it only would in a way make my problem sort of worse, continuing to interact and manage people and employees. And I was just sort of done with all that.

Scott: And your transaction was majority in cash and then an equity component of Allworth, right? So you’re a shareholder in Allworth. And I would imagine that that cash infusion was probably the largest cash infusion you’ve had personally. Did it change your mindset much in how you looked at your future or your clients or anything like that?

Chris: So, you know, again, as I went through the due diligence process of investigating Allworth and the proposal that they provided to me, a number of things started to line up for me. My father was diagnosed with cancer at age 55 and he died at age 59. So, I thought a bit about that for myself. I was 55 when I started to look at Allworth and I thought, you know, maybe there’s… I should think about this a bit. The ability for my wife and daughter to extract their interest from my business, if anything ever happened to me, would’ve been very, very complicated and daunting for them. The ability for me to have more time personally, to spend with my family and for my myself was very attractive. And, you know, the financial element that Allworth provided certainly dovetailed with that. I’ve got some extra money now and I can do some things that I was always wanting to do, but was planning on doing later in life. So, I’m able to do them now and enjoy the time that that affords me.

Scott: And do you have a…do you wanna retire at some point in time? You’re 56, like, you’re thinking I’m out at 62 or 65 or 70, or you don’t even think that way.

Chris: Well, you know, so that’s another thing that came up here. I’m not ready to retire right now. And this notion of sell and stay was very appealing to me. So, I really enjoy what I do. I like my clients, I like helping people and I would probably drive my wife absolutely crazy if I retired right now. So, the structure of getting all of the things that go into running the practice off my plate and the ability to stay on as an advisor for my clients and continue to take care of them really for as long as I want was very appealing to me.

Scott: And you’re now also a partner in Allworth and will share in success of the organization.

Chris: That’s right. Exactly. So, this was one of the differentiators too. As opposed to just selling this practice to another advisor at some point in the future, the ability to be a partner in the broader firm of Allworth and have that component, that financial component and the upside of that equity, was a big difference between the traditional route of just selling the practice.

Scott: And so, we did this transaction in July of this year. You were primarily a fee-based advisor but affiliated with a broker-dealer. So, that kind of transition tend to be a little…it’s just repapering the clients and stuff, whether it’s digital or paper, it’s still a quite a process to go through. What was that like? And then now that it’s been a few months after, what’s working well and where are some areas that you would like to see improvement? And I try to be very transparent, obviously.

Chris: No, it was… you know, I’m not gonna lie. It was a big deal. We had to repaper everybody. We were custodying everything at LPL financial, and we had to repaper every single account. And it was an enormous amount of work. We were able to use DocuSign which really expedited it. So, I think we probably had all the repapering done within a month. Out of roughly 400 clients, only three people did not come. One of those we didn’t want, anyway, and the other two had pretty legitimate reasons. So, it was a reaffirmation to us that the clients…we’ve always done the right thing for the clients and the clients wanna stick with us. They don’t really…I don’t think they care so much about Allworth [crossalk 00:15:38]

Scott: I imagine the first question is, Chris, are you staying right? Like, are you going anywhere?

Chris: Yeah. Yeah. That was the question. So, you know, we just explained this to people. I said, the business has gotten too big, I can’t do two full-time jobs anymore. I’m gonna run myself into the ground and kill myself. It’s just too much. So, I’m partnering with this other firm. They’re essentially a bigger version of us. They think about the business the same. They think about clients the same. They’re financial planning oriented with portfolio management as an ancillary service. And oh, by the way, the service offering gets better, gets broader, we have a deeper bench. My succession plan is addressed. It’s beneficial for you as a client. It’s beneficial for me as your advisor. And all the clients said, “Sounds great. Congratulations. What do we do now?” And we just cranked through it and we did it.

Scott: And were most of your clients comfortable with DocuSign?

Chris: Yeah. Because we’ve been using DocuSign for a long time already.

Scott: Oh, good.

Chris: So that was easy.

Scott: So, now it’s December of 2021. What are you liking about… What’s working out well for you and what are some areas of improvement that you’d like to see.

Chris: Well, I was just thinking about this the other day. So, we’re roughly five months in now and everything is calmed way down. We’re back to what I call business as usual. We’ve got our more normal cadence in terms of how we’re interacting with clients. And the biggest thing that I’ve noticed is I already have a lot more time for clients.

Scott: And do you have more time…

Chris: I’m not having to… Yeah. I mean, I’m much more relaxed. I’m not so stressed out. I’m not wearing 20 hats throughout the day. And I can really focus on my clients and taking care of them. And then I’ve got a pretty deep bench and a lot of resources to lean on with Allworth.

Scott: Do you find that you still have autonomy of your time?

Chris: Autonomy of my time?

Scott: Yeah. Like…

Chriss: Yeah. Yeah, I do. I mean…

Scott: You’re not punching a clock [inaudible 00:18:10] checking your calendar.

Chris: No, no. You know, I’m an employee now, which is sort of a weird thing to wrap your head around, but it doesn’t really feel like that. I still feel fairly independent. I’m taking care of my clients the way that I always have. I make my own schedule. So, not much has changed in that regard. I just don’t have all these other things that were gobbling up my day every single day.

Scott: And has that been helpful as far as bringing in new assets, new clients?

Chris: Well, it’s interesting you say that because we’ve probably got right now about seven referrals from existing clients, and it’s roughly 20…about $20 million total across those seven referrals. And those are all recent referrals from clients who have gone through this transition. So, again, it reaffirms to me that the clients are, are very comfortable with what we’ve done and they continue to introduce us to their friends and family and colleagues.

Scott: And then what’s an area of improvement that you’d…some area you’d like, “I wasn’t expecting this, or I wish this would be better.”

Chris: Well, you know, I think the way I’d answer that question right away is that the fact that Allworth has a tax offering and an estate planning team is we’ve gotten an incredible response to this. So, the ability to have tax consulting or tax preparation done through Allworth and the ability to have estate planning consultation, our clients have responded to this very, very well. And we’re introducing people every day now to both of these different teams. And we told clients when we explained what we were doing, we said, “You know, our service offering is gonna get broader and better. And this is one of the areas that we think you’re really gonna benefit from.”

Scott: Cool.

Chris: That’s how I’d answer that question.

Scott: Okay. Well, good. Well, thanks. Well, myself personally, Chris, I started as a financial advisor 31 years ago. And I used to have lots of clients. Now I have pretty much none, handful. I view you as my client, like, the firms that have joined us are partners now. And I know I’ve told you this and told other partners, like, my objective is to see to it that this next chapter in your life professionally is your best one yet. Number one. And number two, I want to see to it that the equity that you rolled into Allworth grows tremendously I mean, frankly, that’s what I’d like to see. So, that’s what I’m working towards. So, I appreciate you taking some time to join us today.

Chris: I’m glad to do it. And it’s always good to talk with you.

Scott: Yeah. Thanks so much, Chris. So, thank you for being part of our “State of Industry Podcast.” Do you wanna learn more about Allworth? We’ve got a website specifically for partners called allworthpartners.com. If you go to allworthpartners.com, you’ll see a bunch of different resources that you could hit. There’s some white papers on some other people who made this transition and some stuff on succession plan. And it’s a lot of education there for you if you’re kind of at this stage of your career, thinking about the next chapter. So, again, allworthpartners.com and we’ll see you next time. Thanks.

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