0:02

Making a successful mid -career switch

0:04

into financial advising and then

0:06

quickly establishing yourself as a

0:08

lead advisor with a full

0:10

book of high -quality clients

0:12

is no small feat. Today's guest

0:15

has done exactly that. Hi

0:17

everyone, I'm business coach Steve Sandusky

0:19

for Barron's Advisor, the Way Forward

0:21

podcast. My guest today is

0:23

Rachel Elson. Rachel is a

0:25

former high -powered personal finance journalist

0:28

who made the leap to

0:30

becoming a financial advisor at Paragon

0:32

Wealth Management, which is

0:34

an RIA with more than 8 billion

0:36

in assets under management. In

0:38

today's conversation, Rachel discusses her

0:40

journey from being a second -seat

0:42

advisor to managing relationships with

0:45

over 50 households, many

0:47

of whom are younger tech

0:49

professionals in their 30s and

0:51

40s. She also shares some

0:53

valuable insights into Paragon's approach

0:55

to training new advisors through

0:58

observation, mentorship, and collaborative

1:00

learning rather than rigid

1:02

formal processes. She also

1:04

explains their team -based service

1:06

model and how they develop

1:08

systematic frameworks for handling common

1:11

client scenarios like stock compensation decisions.

1:14

We also explore Rachel's perspective

1:16

on what makes an effective

1:18

advisor in today's environment, including

1:20

the critical importance of really

1:23

listening to clients and understanding

1:25

the nuances of what they're

1:27

saying and sometimes what they're

1:29

not saying. With that, here's

1:31

my conversation with Rachel Elson. You

1:34

made a transition from being

1:36

a high -end, high -powered personal

1:38

finance journalist to being a

1:40

financial advisor about five or

1:42

six years ago. Tell me

1:44

about your

1:47

perception of what the career as a

1:49

financial advisor was going to be like versus

1:51

the reality of it. I don't know

1:53

that I had a lot of sense of what it was

1:55

going to be. I informational

1:57

interviewed with probably

1:59

20 different firms in San Francisco.

2:02

And I don't think I was necessarily asking the

2:04

right questions, but I was getting a vibe. I

2:06

was getting a sense of what they were like. The

2:09

one thing is I did not realize how

2:11

much fun this was going to be. I feel

2:13

like I am cheating. to have a second

2:15

career that is so much fun compared to my

2:17

first career, which was also a great career

2:19

and which was also fun. Now,

2:21

is this type one fun or is this type

2:24

two fun? And what

2:26

I mean by that is I just got

2:28

done with a 600 mile sailboat race. And

2:30

during the race, it was brutal. I'm going

2:32

to be honest with you. So crew members

2:34

were talking among ourselves and were like, this

2:36

is not fun. But I think. When we're

2:38

done with this, we're going to look back

2:40

and say, oh my gosh, this was epic.

2:42

This was amazing. So that's really the type

2:44

two fun where looking back, it's fun. But

2:46

is it really fun in the moment? It

2:48

really is fun in the moment. I have

2:50

amazing clients and I get to spend my

2:52

days helping people I really like do smart

2:54

things. Okay. It's hard to argue with that.

2:56

So we're going to segue on this for

2:58

a second because we're here at the Barron's

3:00

conference and I was having a side conversation

3:02

with the financial advisor yesterday. And

3:04

what she said to me was, How

3:07

do you deal with being

3:09

an advisor where I am having

3:11

so many heavy conversations right

3:13

now? I have clients come to

3:15

me saying I found my spouse passed

3:17

out on the floor and they died

3:19

five days later Conversations like that and

3:21

she said it's really weighing on me

3:23

because I'm a very empathetic person and

3:25

how can I? Continue to thrive in

3:27

this business when I'm having all of

3:29

these heavy conversations. So that's very different

3:31

from the fun that you're talking about.

3:33

So are you having those kinds of

3:35

conversations? How do you deal with that?

3:38

I have some. I have had fewer health

3:40

related conversations. I did like maybe a

3:42

year and a half ago because a lot

3:45

of my clients are in tech. I

3:47

did have a lot of layoff conversations and

3:49

those were uncomfortable, but that's a different

3:51

level. Or even divorce conversations. It

3:53

doesn't have to be a death, of

3:55

course. Yeah, I've been privileged that a lot

3:57

of my clients have been healthy, have

3:59

been happy, have been getting married. And

4:03

so I'm sure I will

4:05

need to handle those skills, but

4:07

it's not, I'm fortunate that

4:09

to date that has not been

4:11

a lot of my experience. And

4:14

related to that, this ability to have those

4:16

conversations is another thing. So another thing this

4:18

advisor was saying to me is that, how

4:20

do we train people for that? If you're

4:22

bringing on a new advisor, and I think

4:24

in your case, but you've had 15, 20

4:26

years of life experience as an adult behind

4:28

you before you became an advisor. So

4:31

did you find that to be a

4:33

challenge at all in terms of having

4:35

these types of life conversations with people,

4:37

these intimate conversations about money with clients,

4:39

was that an issue at all or

4:41

was it like, hey, I'm okay with

4:43

this because I've been an adult for

4:45

20 years already. I've had these kind

4:47

of conversations and as a journalist, I

4:49

ask a lot of questions so I'm

4:51

really comfortable with that. I think actually

4:53

that's one of the things about being

4:55

a journalist that helps me is I

4:57

can ask those questions and I can

5:00

tell also, I think when I'm not

5:02

getting a straight answer. I think that

5:04

has been, you hear

5:06

someone say something and you're like, I think I need

5:08

to push a little more on that. I think I

5:10

need to understand that a little bit better. But

5:12

we are all up in your business. We're

5:14

a very planning forward high -touch firm. And

5:16

so I could tell you right now which

5:18

four of my clients are going through IVF

5:21

right now. We have a lot of

5:23

discussions because our clients are younger and they're

5:25

still in those household formation stages. We

5:27

talk about. Oh, we didn't get this house. We

5:29

wanted this. We wanted a baby. We had things

5:31

that we're trying to do that are challenging. And

5:33

so we do talk about those pretty intimately. Talk

5:36

to me about your training. And

5:39

again, you've got 20 years of adult experience

5:41

behind you before you became an advisor, which

5:43

is going to be different than someone who

5:45

maybe is 23 years old and is starting

5:47

out as an entry level associate advisor or

5:50

paraplan or what have you. Walk

5:52

me through the kind of training that you

5:54

had, what worked, what didn't work, what do you

5:56

wish would have been done differently as a

5:58

trainee advisor? A lot of

6:00

it was not being taught

6:02

to do something, it was simply

6:04

being in the room and

6:06

hearing how the conversations happen and

6:08

seeing somebody else do something

6:10

right and learning how to do

6:12

that and learning how to

6:14

mirror that. We're not a

6:17

uniform advice provider. Paragon is very

6:19

committed to having all of its

6:21

advisors have their own way of

6:23

doing things. But we have a

6:25

lot of really smart, talented people.

6:27

I was able to sit in

6:29

a lot of meetings for really

6:31

the first two to three years,

6:33

I would say. I was

6:35

second seat. For the first six months to eight

6:37

months, I was not in the meetings. But once

6:39

I was in the meetings, I was the second

6:41

seat in a lot of meetings with our CEO

6:44

and with our head of planning. and

6:46

really understanding how they approach things and

6:48

just learning to mirror that. And there's

6:50

certain sort of ways, language we use,

6:52

ways of explaining things that get carried

6:54

on from advisor to advisor. We all

6:56

sit in the same room. We hear

6:58

someone else talking about something the next

7:00

time I hear you. We just picked

7:02

up a phrase from one of actually

7:04

our younger advisors. She'd started talking

7:06

about... about cash and about bonds and

7:08

such as lines of defense, cash is your

7:10

first line of defense, bonds are your

7:13

second line of defense. I was like, oh,

7:15

that's really good phrasing. That's an interesting

7:17

way of presenting that. So I'm always looking

7:19

for like ways to explain something, ways

7:21

to connect. I'd love another example or

7:23

two along those lines that you picked up from

7:25

some of the advisors where you said, oh, well,

7:27

that's I like how you phrase that. I'm going

7:29

to pick that up or maybe some commonalities among

7:31

the advisors where they were saying something similar. And

7:33

you're like, I'm going to do that too, because

7:35

I like that. So as part

7:37

of our sales pitch, our CEO always says,

7:39

we're not going to tell you what to

7:41

do. We're going to present the information and

7:44

let you make the decision. And

7:46

then we've iterated it a little bit.

7:48

And so now we say, I'm not going

7:50

to tell you what to do unless you

7:52

want me to. If you want us to,

7:54

you should let us know and we

7:56

will push you a little bit. But we

7:58

want to make sure you're comfortable with that.

8:00

And occasionally we have a client who hires

8:02

us to tell their spouse what to

8:04

do. And that happens too. Yeah. So you

8:06

sit in on these meetings, so that's part

8:08

of the training process. What else is going

8:10

on? Are you having debrief meetings? Are

8:13

you having progress reports? Are there

8:15

tests you need to take? How are

8:17

they going to know that Rachel

8:19

is ready to be first chair? So

8:21

for a long time in those

8:23

meetings, my boss would be the lead

8:25

advisor and I would be the color commentary.

8:27

Who's going to present this? I'm going to

8:29

talk about this. I'm watching to see, because

8:31

I'm, we're on zooms, right? So I'm watching,

8:33

as my colleague is talking, I want to

8:35

see if the client is tuning out, if

8:38

they're not paying attention, if they don't seem

8:40

like they understand. So I'm the de jargon

8:42

person. I'm the, can

8:44

I interrupt you for a second? When we talk about

8:46

value versus growth, do you know what that is? I'm

8:48

the one who sort of jumps in

8:50

there and fills in the gaps. So

8:52

by the time I was quote unquote

8:54

ready to fly, My boss

8:57

had seen me many times talking to

8:59

clients. We worked through for a long time if

9:01

I was sending an email to a client. If it was

9:03

anything other than just scheduling, I would

9:05

run it by them. If we were making

9:07

recommendations, I wanted to make sure that my

9:09

boss was comfortable and that the lead advisor

9:11

was comfortable with what I was sending out.

9:13

And we do the same thing with the

9:15

younger advisors now. We ask if it's something

9:17

that's material and it's not something that they

9:19

have a lot of experience with. I want

9:21

to see the email before they send it

9:23

out. Was there an official handoff where you've

9:25

been sitting in on these meetings and your

9:27

colleague says to you, Rachel, you're ready to

9:30

fly. You're going to be the lead advisor.

9:32

I'm out of here. Was there anything official

9:34

like that? Or how did the handoff work?

9:36

We're not a very official firm. Often

9:39

it was a meeting had to happen.

9:41

Somebody had a conflict. Hey, Rachel, can

9:43

you handle this one? Sometimes there was

9:45

new clients coming in. I can't. take

9:47

on this client, can you take them

9:49

on? Sometimes it was my friends or

9:51

my contacts or my referrals from people

9:53

that were already working with me that

9:55

would send them along. It was a

9:57

very organic process, which is probably a

9:59

different way of saying a very disorganized

10:01

process, but it worked. There was

10:03

a flow to it. And I never felt like

10:06

I was taking on work I couldn't handle. And

10:09

I don't think my bosses

10:11

thought that I was taking on

10:13

work that they were not

10:15

ready for me to have. Roughly

10:17

how many households today would

10:19

you consider yourself to be the

10:21

lead advisor for mid fifties

10:23

mid fifties? Okay, and of those

10:25

how many of them were

10:27

existing relationships with the firm that

10:29

got moved to you over

10:31

time versus you organically source them

10:33

that is a hard question

10:35

to answer so there's probably only

10:37

two or three That started

10:39

out with somebody else and then

10:41

moved over to me. Oh,

10:43

there are several however where My

10:46

boss and I came in

10:48

as a team and then my

10:50

boss couldn't like just basically,

10:52

it made more sense for me

10:54

to continue the relationship. So

10:56

even though we started together, I

10:58

was basically the advisor from

11:00

if not week one, then maybe

11:02

week 52. Certainly within early

11:04

on in the process or like

11:06

within the first year, I

11:08

had become the de facto advisor.

11:11

And then that probably

11:13

accounts for hard

11:15

to say but maybe a third to a

11:17

half of them and the other half have

11:19

just come in through, I've

11:21

already been doing work and someone else has

11:23

referred me. A handful of marketing

11:25

connection like completely cold but the vast majority

11:27

were referrals. Yeah that's interesting because oftentimes

11:29

these days it seems like to get new

11:31

advisors started they train under the lead

11:33

advisor and then over time the lead advisors

11:36

got way too many clients so now

11:38

we're sort of offloading some of the lead

11:40

advisor's clients to this new advisor and

11:42

that's how they get started. So I was

11:44

prepared to hear you say, oh, 90 %

11:46

of my clients were existing clients with

11:48

the firm that sort of got moved to

11:50

me over time. But it doesn't sound

11:52

like that's the case with you. No, but

11:54

we had a lot. So I came

11:56

in and it was fairly clear that my

11:58

job was to create capacity for our

12:00

head of planning so that he could create

12:02

capacity for our CEO. And

12:04

so I came in and very quickly

12:06

realized that we needed someone to create

12:08

capacity behind me. and that I was

12:10

coming in and doing these first meetings

12:12

with our head of planning, and then

12:14

I was basically running with it at

12:16

that point. Or I was part of

12:18

the relationship from the get -go, but

12:20

eventually just it became more my relationship

12:22

than his relationship. But it wasn't

12:24

like they had been clients for five years, and

12:27

then I took over. For the most

12:29

part, they're people that I started with. But

12:32

I was too junior to really handle them

12:34

on my own at the very beginning. But I've

12:36

been in the relationship from the beginning. And

12:38

part of that's just we've had so much

12:40

growth on our team. And so

12:42

just the number of households coming in.

12:45

were more than the two of us could handle

12:47

just like where every single one was a partnership.

12:49

So we have split some of those and continued

12:52

to work with other younger advisors on the team.

12:54

Yeah. And I want to get to the growth

12:56

here in a moment. Are you a

12:58

CFP right now? I'm a CFP. Okay.

13:00

And that all happened over the past

13:02

few years since you started with the

13:04

firm or what was the genesis of

13:06

the CFP program? After I left my

13:08

last journalism job, I took a year

13:11

basically to quote unquote not work. The

13:13

first half of the year I did

13:15

Big chunk of my CFP classes and

13:17

then at some point I thought I

13:19

should really be inside a firm and

13:21

make sure I actually like this and

13:23

so I started looking for internships and

13:25

I informational interviewed a lot of different

13:27

firms and I waited till I found

13:29

one that answered my questions the way

13:32

I wanted them and I joined Paragon

13:34

as an intern summer of 2019 by

13:36

the beginning of 2020 I had finished

13:38

almost all of my coursework And I

13:40

was just waiting for the exam. And

13:42

so I came on it as a

13:44

quote unquote full time, but it was

13:46

really an 80%. We set the salary

13:48

at full time. I worked four days

13:50

a week until I took the exam.

13:53

I thought that was going to be the summer

13:55

of 2020. 2020 threw us

13:57

some curveballs. And so it was actually in November

13:59

2020 that I sat for the exam. But

14:02

I already had the experience taken care of because

14:04

of my journalism background. So as soon as

14:06

I passed the exam, I could use the CFP

14:08

mark. You mentioned you've done

14:10

about 20 informational interviews and waited until

14:12

you found a firm who said what you

14:14

liked. What were some of the things

14:16

that you were hearing that you didn't like

14:18

and what was it about Paragon that

14:20

you did like? This is to be very

14:22

controversial. I knew that I wanted to

14:24

work with younger people in their 30s and

14:26

40s and I asked every firm, do

14:28

you have a minimum and what do you

14:30

do if you have couple,

14:33

they're both in their thirties, they both work

14:35

in tech, maybe they make $3 .5 ,400, they

14:37

are going to be very successful, but they're

14:39

not at your minimum yet. And

14:42

with the exception of

14:44

some one -off shops, some

14:46

individual planners, almost everyone said, they'll

14:49

come back to us when they have enough.

14:51

And then I got to Paragon, and I

14:53

asked our CEO, Arthur Ambrick, what

14:56

do you do when you have these

14:58

young, wealth -high earning couples? Industry

15:00

calls them Henry's which I hate but

15:02

these hiring couples and they're young and

15:04

they're building their lives and making big

15:06

decisions What do you do about them?

15:08

And he said we work with them

15:11

because this is when they need our

15:13

help I thought okay. I found my

15:15

place. Yeah, pretty simple and interesting was

15:17

at a session here at the Barron's

15:19

conference with a gentleman from Wealth Enhancement

15:22

Group. And he said, as a firm,

15:24

they don't have a minimum either. He

15:26

said, certain advisors may have a minimum,

15:29

but we feel if we want to be a

15:31

financial advisory firm, we're going to work with anybody

15:33

that pretty much wants our help. Yeah, there's

15:35

definitely different schools of thought on that. And I

15:37

don't think there's a right or wrong answer. It's

15:39

just, what's your business model? What are you

15:41

trying to accomplish here? Who are you best suited

15:43

to serve? And where I think

15:45

firms can go wrong is if they're

15:47

really designed to work with people that have

15:49

2 to 10 million in assets and

15:51

then they say, oh, yeah, we'll take on

15:53

someone with 250. You're really going to

15:55

do a disservice to that person because you're

15:57

not set up to serve them. They're

16:00

an afterthought. They're not going to get

16:02

your attention. And so they'd be better

16:04

off going to another organization that is

16:06

designed to work with folks that have

16:08

those asset levels and probably not as

16:10

complex financial situations. So I think everyone

16:12

deserves financial advice, but work with a

16:15

firm that's best suited to meet the

16:17

needs for where you are at that

16:19

moment, where your trajectory is as well.

16:21

And there's just a footnote to that.

16:23

There's a lot of value to the

16:25

firm in having a client base that's

16:27

growing wealth. Our median

16:29

client age, my team,

16:31

I want to say it's 39 or

16:34

40. It was 38, but

16:36

apparently we all age. So I

16:38

think it's 39 or 40. And

16:40

for the most part,

16:42

our retired clients are

16:45

people where someone said, oh, could you

16:47

work with my mom? Could you help my

16:49

dad figure some stuff out? We start

16:51

with the younger generation and then we go

16:53

up. So that's a specific focus of

16:55

the firm, right? my certainly. Of

16:57

your team, okay. As a firm,

17:00

is that the focus or are

17:02

you taking on all commerce here?

17:04

Our CEO is very clear that

17:06

every advisor should have their choice

17:08

to have the practice that they

17:10

want. So there are advisors who

17:12

focus completely on values based investing.

17:14

There are advisors who focus on

17:17

female founders and CEOs. We have

17:19

somebody who focuses on divorced and

17:21

widowed women of a certain age,

17:23

very different practices. So I

17:25

can mostly speak for my team. Regarding

17:27

the growth, and you mentioned you're just

17:29

a little bit ago that the bulk

17:31

of your clients were really

17:33

more developed through you or connections or,

17:35

but somehow started with you. Yeah.

17:37

So tell me a little bit more

17:40

about that. You mentioned you've got

17:42

maybe 50 households right now. What do

17:44

you do as your capacity and

17:46

what are you doing to bring in

17:48

new clients today? I don't

17:50

know what my capacity is. Are you at it?

17:52

Are you at it right now? I

17:54

don't think I am, but I

17:56

think there's some reorganizing of the team

17:58

that is about to happen. I

18:01

am bringing in new clients today. So

18:03

one of the interesting things about working with

18:05

younger clients is they are super referrers. So

18:08

I have one client, for example, who

18:10

came in through a referral service, like

18:12

a matchmaking service. She

18:15

referred her sister. She was

18:17

leaving her job. She referred the

18:19

guy who took over her job. He

18:22

referred I think two or three

18:24

other people at that firm. So

18:26

now we have, through one

18:28

referral service, we have six

18:31

clients who've come on board.

18:33

We have other firms, smaller

18:35

firms, where they have complex

18:37

stock issues, where we have

18:39

numerous people from one original

18:41

client. It's been extremely, there

18:44

are cycles in the Bay Area and in

18:46

tech. Very fortunate to be able

18:48

to work with people we really like and know

18:50

that the people they refer will also be people

18:52

we really like. And when

18:54

you get a referral like that, do

18:56

they just call you? Do they

18:58

text you? Do they go to your

19:00

website first and do their due

19:02

diligence online? Do they check out your

19:04

YouTube channel or your podcast or

19:06

your LinkedIn or TikTok or Instagram? Or

19:08

how does the connection actually go

19:10

from someone's referring to you actually having

19:12

a conversation with them? I'm sure

19:14

they stalk me. I would hope they

19:16

stalk me. I don't have a

19:18

TikTok. I don't have a YouTube channel,

19:20

but I'm fairly public presence online.

19:22

You can learn a lot about me

19:24

online. It's usually just

19:26

an email like, Hey, would

19:28

you work with my friend so -and -so? He's looking

19:30

for an advisor or she's looking for an advisor.

19:32

I'll let you two chat and I'll just reach

19:35

out and say, Hey, let's talk. So they do

19:37

like an email. It's usually an email handoff. Okay.

19:39

Sometimes they'll ask us first. Sometimes they

19:41

just throw it at us. It's

19:43

fine. Okay. So that's a main thing.

19:45

Would you say your growth right

19:47

now is just through referrals from existing

19:49

clients? We also are using some

19:51

referral services. Like what? At different

19:53

times, these have been up and down,

19:55

but we have several clients that came

19:57

in through Harness. We used

20:00

Zoe for a while. I probably have

20:02

maybe three clients that came in

20:04

through Zoe. We've done some work

20:06

with Dataline. I know

20:08

there's some other channels that are being

20:10

tried right now. Like we're constantly looking

20:12

at them. and trying to decide which

20:14

makes sense. But we have

20:16

a sort of shared doc that we're

20:19

all looking at where we're looking

20:21

at all the leads in the flow

20:23

and who's handling what and what

20:25

stage they're in. And one of the

20:27

columns is what's the referral source

20:29

or how did they find us? Occasionally

20:31

it's through the website, but much

20:34

more often when I look down there,

20:36

it's very much a client name

20:38

somewhere. So certainly right now. Okay. So

20:40

again, $8 billion ish firm. And

20:43

how much of the future

20:45

growth do you think is gonna

20:47

come from like corporate marketing

20:49

activities versus individual advisor activities versus

20:51

I just was in a

20:53

meeting today where the firm said

20:55

we have over a hundred

20:57

people in our sales and marketing

20:59

department. And so they've got

21:01

a full -blown business development department

21:03

that's generating these leads that then

21:05

get handed off to the

21:07

advisors eventually. So how does Paragon

21:09

think about growth from

21:11

a sales and marketing

21:14

standpoint. We've just started hiring

21:16

for that to date. We've

21:18

done almost no marketing

21:21

and we use the harnesses

21:23

and the Zoys platforms

21:25

like that. We've done a

21:27

small amount of PR

21:29

like really. fairly

21:31

limited marketing. We just

21:33

hired someone who's rethinking that and he's

21:35

assessing what's working, what's not working,

21:37

are there better ways, are there other

21:39

ways to handle organic growth? If

21:42

this team over here in San Francisco

21:44

closes really well, do we just send everything

21:46

to them or do we find other

21:48

advisors within the firm who are also like,

21:50

who have other specialties or who want

21:52

to grow or have other regions that might

21:54

make sense? So that is

21:56

a TBD. But I think

21:59

that Paragon has had both inorganic and

22:01

organic growth. Inorganic sounds awful.

22:03

We've had growth by bringing in new

22:05

advisors and new firms, and we've also

22:07

had organic growth within our own team. Let's

22:10

go back to your development

22:12

as an advisor. Compensation, of

22:14

course, is going to be a key piece

22:16

of that. And you and I were

22:18

talking offline. You mentioned that there's some changes

22:20

that are happening. But how do you

22:22

think about the compensation Is

22:24

it worked for you or didn't work

22:26

for you and any high -level thoughts about

22:28

compensating a new advisor? We

22:31

right now and certainly

22:33

over the time I've been

22:35

here have defaulted to largely

22:37

salary. If I have

22:39

a young person who's working

22:41

on our team and they

22:43

have the choice between helping

22:45

us serve a $25 million

22:48

client versus going out and

22:50

finding a $300 ,000 client, it's

22:52

obviously a much better use of

22:54

their time to have them support the

22:56

$25 million client. So I don't

22:58

want to incentivize someone for bringing in

23:00

small business when they can help

23:03

retain the large business. So

23:05

I think that's fine. I think there's

23:07

an inflection point where I and where

23:09

other advisors on the team want to

23:11

get to a point where we're recognized

23:13

for the work we're doing and the

23:15

client base that we're working with. If

23:18

you do it too soon, then you don't have enough

23:20

client base to be able to have that workout. I

23:22

think I said, the one thing I will tell you

23:24

is that I took a pay cut from journalism to

23:26

come into this field and I'm back above it now,

23:28

but it took a while. But I

23:30

think that was, we talked through it at

23:32

multiple times in the phase and there was

23:34

a like, should I get paid this way

23:36

or that? And I feel like it has

23:38

been the appropriate conversation along the way. Yeah.

23:40

Comp is one of those things where there's

23:43

never like one way to do it.

23:45

Each firm, they fiddle with it and they

23:47

make changes and typically there's lots of

23:50

different variations of it. But one way I

23:52

like to think about it too is, are

23:54

you a servicing advisor? Meaning, hey, we don't

23:56

have you in place because we want you to

23:59

bring in a whole bunch of new business.

24:01

We've got plenty of clients. We just need advisors

24:03

that can take care of these people and

24:05

service them. So that's probably going to be more

24:07

of a heavy based salary plus some kind

24:09

of bonus comp versus I mentioned this firm that

24:11

has over 100 people in sales and marketing.

24:13

They're going to be very focused on variable comp

24:15

based on how many people you bring in

24:17

because they're not really designed to service those people

24:19

after the fact. So you just have to

24:22

come up with a compensation program that is fit

24:24

for the purpose of what you're trying to

24:26

accomplish because generally people are going to do what

24:28

you pay them to do. So if you

24:30

have a high variable comp, then they're going to

24:32

do the stuff that's going to give them

24:34

the variable comp versus If you wanted

24:36

to just service clients, it shouldn't be a

24:38

variable compensation plan. Give me the base salary

24:40

kind of thing. So I don't know if

24:42

you think about it that way too or

24:44

differently. I don't really think a lot about

24:46

the service versus we don't have a sales

24:48

team. So just to be clear,

24:50

clients ask, are you going to be my advisor?

24:53

And I'm like, I won't be your only advisor.

24:55

You will have a team. We always have a

24:57

team approach. But no one in their

24:59

right mind would hire me to do sales. I'm the advisor.

25:01

I want to work with you because we seem simpatico

25:03

because I think you've got a lot of growth ahead. I

25:05

think I can help you make a lot of good

25:07

decisions. There's a lot of good work we can do together.

25:10

But like that notion of being a service

25:12

advisor, it doesn't quite work with our team.

25:14

We'll have a lead and a second advisor,

25:16

but they're all part of the relationship. So

25:19

as you reflect on the past five

25:21

or six years of your development as

25:23

an advisor, what do you

25:25

think about that? What was good? What was bad?

25:27

What do you think you would want to do

25:29

different? What advice would you have for leaders saying,

25:31

hey, if you're trying to train

25:33

new advisors, here's some key things I think you should

25:35

think about? One of the things

25:37

that we're doing right now, and this was

25:39

largely at one of our younger advisors, instigation,

25:41

I want to be really clear, is that

25:43

we've grown so fast, and we were really

25:45

a startup. We were a scrappy little team,

25:47

and we just grew when we figured stuff

25:49

out as we went. Now

25:53

one of our younger advisors is, I need

25:55

more process. I need more

25:57

systems. And so really at HerbaHast,

25:59

she and I have started putting together like,

26:02

what's a checklist for every new client plan that

26:04

we're doing? What's a checklist? One of the

26:06

things that we do because we work with young

26:08

clients and because they work in tech, we

26:10

do quarterly quick check -ins around their stock comp.

26:12

Their trading window opens up. We want to talk

26:14

about how concentrated they are. What's the methodology

26:16

around how we think about that? How do we

26:18

talk to them about it? So

26:20

there's a checklist for how do you do a

26:23

stock as percent calculation? How do

26:25

you work with an advisor on that?

26:27

There's a checklist for onboarding after you've

26:29

done a client plan. There's a checklist

26:31

for preparing a review. And so we've

26:33

been working on a lot of that

26:35

because we have two new planning associates

26:37

and one new intern starting in a

26:39

like. four -week period, five -week period. And

26:41

so we've been trying to make sure we had that all

26:44

lined up so that we could teach the new people how to

26:46

do all this stuff in a way that was a little

26:48

more systematic. And I think that

26:50

has been helpful to our other advisors

26:52

and helpful to the new people. And

26:54

I think it's going to help us

26:56

going forward. When I

26:58

came in, I spent the first two

27:00

months of my internship just banging

27:02

my head against e -money. And

27:04

I took some notes and I eventually had

27:07

a doc that sort of worked inside my

27:09

brain for how to use e -money. And

27:11

then we brought in our next intern and

27:13

she looked at it and was like, this

27:15

is helpful. And so she

27:17

rewrote the whole. process doc for using

27:19

e -money because e -money is so flexible

27:21

and so scalable and every firm uses

27:23

it differently and there's different sets of

27:25

assumptions so she wrote a good clean

27:27

outline of like how to use e -money

27:29

and so that's now the bible so

27:31

everybody that is using e -money on

27:33

our team like that's the bible they

27:35

use and as they find things like

27:37

oh e -money changed this particular thing I'm

27:39

like change it on the document make

27:41

sure that's codified somewhere. So

27:44

like having some of these

27:46

instructions, these checklists, systems

27:48

in place is very helpful.

27:50

I'm to add one more thing

27:52

around the stock conversation and the

27:55

open trading windows. We now

27:57

have a sort of four point rubric that

27:59

we go through with people. If you're getting

28:01

RSUs, I'm never going to tell you not

28:03

to sell. But a lot of people, they

28:05

want to keep some skin in the game.

28:07

So here are the four reasons that I

28:09

will push you to sell if you don't

28:11

want to sell. And we go through that.

28:13

Last year during one of the open trading

28:15

windows, I went on a ill timed vacation

28:17

and all the younger associates jumped in and

28:19

answered the questions and we had this rubric

28:21

and we had this framework and so they

28:23

were able to just take that and give

28:25

the same kind of answer that I would

28:28

have given because they'd be applying the same

28:30

sets of logic. We want the same pieces

28:32

of information from the clients. We

28:34

want the same spreadsheet, the same framework

28:36

that we do, same calculations and

28:38

then we could give a consistent answer

28:40

no matter who was answering that. And

28:43

what happened? It was

28:45

fine. They flew. You said

28:47

it was an ill -timed vacation. it was an ill

28:49

-timed vacation? No, it was ill -timed because it was

28:51

during a trading window. I could have

28:53

planned that a little bit better, but an

28:55

adventure opened up and I wanted to take it.

28:57

But I made sure everybody was teed up

28:59

in advance. We sent some notes before I left.

29:01

I said, hey, I'm going to be out

29:03

of town. Advisor X or Advisor Y can handle

29:05

this. And so when I turned

29:07

up at the end of the vacation, because I

29:09

tried very hard not to check email on

29:12

vacation, and this one in particular was a, I

29:14

was in some more remote places, They've

29:16

handled it fabulously, and they all

29:18

got much more confident about their

29:20

ability to answer. Yeah, and I'm a

29:22

big fan of checklists, and

29:24

we had a conversation with Bill Keen and

29:26

Matt Wilson, a Keen Wealth Advisors, and they

29:29

have a checklist -driven financial planning process. So

29:31

we talked about that in some detail. So

29:33

I think that's a great idea. But

29:35

I'd love to get your take on this.

29:37

So one of the other speakers here at the

29:39

Barron's conference, another large firm, He

29:41

was talking about artificial intelligence and

29:43

he was saying that the change

29:45

that you've seen in our profession

29:47

over the last 20 to 30

29:49

years is nothing compared to what

29:51

you're going to see over the

29:53

next five years. And he said

29:55

with AI in particular, he thinks

29:57

that what it's going to enable

29:59

planners to be able to do

30:01

on the financial planning side, it

30:04

will do essentially in seconds

30:06

what it might have taken a

30:08

financial planner 20 years to

30:10

figure out and to get the

30:12

level of knowledge. And so

30:14

I'm curious how you guys are

30:16

thinking about technology today versus

30:18

the human in the loop. Are

30:21

you guys having those conversations right now? Our

30:24

relationships with clients are so intimate

30:26

and so warm and we know our

30:28

clients. Don't get me wrong. I'm

30:30

not suggesting tech is gonna replace the

30:32

humans. But what do you think

30:34

tech is gonna be able to do

30:36

that's gonna enable the advisor to

30:38

have more time to go even deeper

30:40

with those relationships and do just

30:42

the things that humans can do? Because

30:44

I think just the things that

30:46

humans can do is getting smaller and

30:48

smaller these days because of tech.

30:50

I agree. But if I could have...

30:52

that spreadsheet created, they stock as

30:54

a percent, spreadsheet created automatically, fantastic,

30:56

but I'd still have to

30:58

explain why. One

31:01

of my clients, I'll say, well, you have

31:03

a lot of cash by my standards, but

31:05

you have really like the normal amount of

31:07

cash for your standards. So let's just leave

31:09

it there. I have to know which client

31:12

wants a bias toward high cash or which

31:14

client has told me over and over that

31:16

they have a goal X and they want

31:18

to make sure they can do that. So

31:20

that piece of it, like the automation of

31:22

various tools is great. But the

31:24

know your client part, I think

31:26

that part will remain a human

31:28

need. A financial advisor has to

31:30

be skilled in a number of

31:32

different areas. So we're talking about

31:34

AI. They got to have some

31:37

understanding of technology. They've got

31:39

to have some understanding of

31:41

financials. They've got to have

31:43

an ability to interact and develop a relationship

31:45

with another human. They need to have

31:47

empathy when a client's spouse passes away

31:49

or there's a divorce or there's some

31:51

terrible thing that's happened. For

31:53

you, what was

31:55

or is the hardest aspect?

31:58

for you to become really skilled at

32:00

as a financial advisor. And

32:02

I want to suggest that it's

32:04

all easy because I don't think it

32:06

was, but the learning, that's

32:09

the feature, it's not a bug. And

32:12

a lot of the things we

32:14

do, I did, but just in different

32:16

contexts, like having

32:18

to demystify an investing concept, having

32:20

to translate. some financial or tax

32:22

concept so that a client understands

32:24

it is not that different from

32:26

doing it as a personal finance

32:28

journalist and explaining something so your

32:30

reader can understand it. I

32:33

think having confidence

32:35

in my recommendations and

32:37

our recommendations is

32:39

probably, I'm not a

32:41

shy and retiring person, but I

32:43

think knowing what you know. and

32:46

being able to stand up and say,

32:48

I understand the research, and I understand why

32:50

we're doing this, and this is why.

32:52

And we've already made this adjustment, but if

32:54

you wanted to make this other adjustment,

32:56

we could do that also, but this is

32:58

the context. This is the upside and

33:00

the downside. Feeling able to stand

33:02

on my own and say that, I

33:04

think that was probably the hardest. Because

33:06

what you recommend to a friend is

33:08

one thing, but what you recommend to

33:10

a client, it's a different relationship, and

33:12

you need to be really sure in

33:14

where you are. And was there an

33:16

inflection point or an aha moment where

33:18

you woke up and said, I'm a

33:20

real financial advisor. I'm confident in my

33:22

recommendations, or is that something that's always

33:25

a work in progress? I

33:27

don't think it's always a work

33:29

in progress, but I think it was

33:31

a fluid path. I don't think there

33:33

was an inflection point. I think you

33:35

just get a little more knowledgeable every

33:37

day. I mean, the constant learning that

33:39

we do as financial advisors, we go

33:42

to conferences, we take continuing education. I

33:44

think that is always. a

33:46

piece of it and you're constantly doing

33:49

that. And I also think that being at

33:51

a firm, one the things that happened

33:53

is as we have become a larger firm,

33:55

we have more resources. We have a

33:57

trading team as opposed to one person. We

33:59

have a chief investment officer who's fantastic

34:01

and who can explain things in a way.

34:04

So if I don't feel confident in

34:06

my ability to do something, I know that

34:08

I have resources to call on and

34:10

people that I can talk to and say,

34:12

how would you frame this for a

34:14

client? How should we talk about this? Is

34:16

this a good option for this client

34:18

or should we maybe not do that? That

34:21

wasn't necessary. learning inflection point but that

34:23

was a growth of Paragon inflection point where

34:25

we had those resources and that's really

34:27

been in the last year and a half

34:29

to two years that we've really taken

34:31

off on that direction. I think you're pretty

34:33

involved in your firm's intern program so

34:35

again based on your experience the past five

34:38

or six years what advice would you

34:40

give to an aspiring financial advisor in terms

34:42

of These are the skill

34:44

sets that you really need to work on.

34:46

You really need to develop. This is really

34:48

going to be critical to your long -term

34:50

success as a financial advisor. What are those

34:52

skill sets? I think that one

34:54

piece of it is really knowing how

34:56

to listen to a client and knowing

34:59

how to hear them, right? Not just

35:01

taking notes, but hearing what they're saying

35:03

and even hearing what they're not saying. I

35:06

also think that just

35:08

knowing the underpinnings of our

35:10

plan, being really

35:12

deeply rooted in the

35:14

planning process, in

35:16

the calculations, in the whatever, gives

35:18

you a place where you can

35:20

talk about things. Ideally, all

35:22

of our interns would

35:24

become planning associates and eventually

35:27

associate advisors. as

35:29

they are starting to come into

35:31

meetings and learn things. The first time

35:33

when they're really talking in a

35:35

meeting and really presenting is doing the

35:38

e -money presentation and going through because

35:40

I know that they were in

35:42

the weeds on that and they know

35:44

all the assumptions that are built

35:46

and they'll be really confident. Are they

35:48

going to be super confident asking

35:50

about ex -personal topic or about what's

35:52

been happening about somebody's IVF process, for

35:54

example? Maybe not. But they're going

35:56

to be really good on the e

35:58

-money presentation. And that just gets them

36:00

used to talking, right? It gets

36:02

them used to presenting and to understanding

36:04

what they're talking about. And

36:06

that's the sort of the building confidence, I

36:08

would say. Rachel, anything else

36:10

you want to add for us today? Thinking

36:13

about our intern program and

36:15

not understanding why more people

36:17

don't take advantage of it,

36:20

of such a program. I talked to

36:22

somebody earlier today who said they

36:24

probably hire 5 % of their interns

36:26

and I thought Why would you waste

36:29

all that time on the 95 %?

36:31

Like our interns, we want to

36:33

have interns that come through pre -CFP

36:35

programs that know they want to be

36:37

advisors, that their program director has

36:39

recommended to us. And so ideally, some

36:41

of them are going to find

36:44

a different path, right? Some of them

36:46

are going to decide that this

36:48

is not the career for them. We

36:50

have a couple of accounting slash

36:52

personal finance or financial planning double majors

36:54

who accounting is luring them. which

36:57

I hope that it's very satisfying for them.

36:59

I think financial planning is more fun, but that's

37:01

their choice, right? They have to grow and

37:03

become the people that they want to be. But

37:06

in general, we want to have people that

37:08

are on that path, and it has been

37:10

so successful and so helpful for us. Everybody

37:12

should be doing it. Rachel, if people want

37:14

to connect with you, what's the best way

37:16

to stay in touch? LinkedIn. LinkedIn. Perfect. All

37:18

right. Thanks for being on the show. Thank

37:20

you so much for having me. All

37:22

right, that's all for today. Make

37:24

sure you like and share this

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37:28

And for more great podcasts, visit

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37:33

Take care and be safe.