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Executive Roundtable Journal
Executive Roundtable Journal

Using The 3 C-Drivers as a Strategic Lens

A conversation with four senior executives
Resources

On September 13, 2018, four senior executives gathered at Informa’s Manhattan offices to discuss the state of the financial services industry and what their firms are doing to address current business opportunities and to prepare for the future.

Participants

  • David Barton, JD, Vice Chairman and M&A leader at Mercer Advisors
  • James Carney, Head of Business Analytics at Morningstar
  • David Patchen, Senior Vice-President, PCG Education and Practice Management, Raymond James
  • Matt Lynch, managing partner of Strategy & Resources, LLC

 Matt began the conversation by talking about how Strategy & Resources views the evolution in the financial services industry through three lenses, dubbed “The 3 C-Drivers.” They are:

  • Consumer and Advisor Preference
  • Competitor Behavior
  • Compliance and Regulatory Environment

For more information on The 3 C-Drivers, Matt Lynch and Strategy & Resources, visit www.StrategyResources.com.

MATT LYNCH: As we get started with our conversation this afternoon, I’d like to first give a brief summary of how I think The 3 C-Drivers serve as a useful, strategic lens.

The first underlying C-Driver is changing consumer and advisor preference. We’ve seen a number of different type of firms get marginalized and new intermediaries come into the space over the period of the last few years who are, in many ways, more responsive to advisor needs and perceived advisor changes so the advisors, in turn, can meet consumer and client needs. Is the trend due to a generational thing due to the fact that robos, digital advice and do-it-yourself (or aided do-it-yourself) options are becoming more relevant? Is it that consumers have changed in terms of the way they want to do business and that, in turn, is driving margin change, product preference, or other things?

The second C-Driver is competitor behavior. Is the trend really a new emerging disrupter coming into the same business offering similar services but maybe in a more efficient and effective way? We talk a lot about that in terms of channel preferences or advisors moving into other forms of business. Advisors moving from a wirehouse to the dually-registered model is an example of a competitive threat. Another competitive threat is the ability for advisors to do business directly through intermediaries versus through a broker/dealer or through another type of vendor, such as the Super OSJ or other business models emerging as attractive affiliation model options.

The last C-Driver is compliance and regulatory. Each of the C-Drivers may be influenced or sourced, to one degree or another, through overzealous or overreaching regulations. So perhaps in the context of what firms chose to do, or not to do, in response to DOL, or looking forward with regard to Reg BI from the SEC, or perhaps thinking about fiduciary-type rules pending in states like New Jersey and here in New York. These are just a couple of examples of a regulatory catalyst impacting the financial services business.

Dave, I know a number of things that are happening at Mercer. Why don’t we start with you? Please provide a brief self-introduction and then tell us what’s going on with Mercer, particularly related to strategic decisions you and your colleagues have made in response to the major trends referenced.

DAVE BARTON: I’m vice chairman of Mercer Advisors, Inc. and up until recently I was the CEO of Mercer. I stepped down last year after a nine-year stint to focus exclusively on mergers and acquisitions for the organization. We’ve been very active in the acquisition market in the last 27–28 months. We’ve been very successful. We’ve done thirteen transactions over that time representing about $4.4 billion in acquired AUM and several thousand clients with firms across the United States. It’s increased our branch footprint. To put some flesh on the bones here: When I took over as CEO in June of 2008, we were six offices and had $2 billion in assets under management. Today we have 31 offices and we have approximately $13 billion in assets under management, and about 275 employees nationwide, with the majority of those folks being client-facing and credentialed — so CFPs, CPAs, attorneys, MBAs, CFAs. We are a very professionally driven organization.

Starting with the regulatory and consumer preference trends, our firm, as you know Matt, is an RIA. We’ve been around a very long time. We are a fiduciary fee-only, firm. We have been that way since our establishment in 1985. We were one of the first fee-only fiduciary firms in the United States. We believe in it. It’s not just a tagline. We have a saying at Mercer, “The only interest to consider is the best interest of the client.” We absolutely put clients first where client financial planning is centermost.

We bolt financial planning onto a number of family office services. I present Mercer as a limited family office where we not only do folks’ investment management but also financial planning and estate planning, in house. We also do tax return preparation and corporate trustee work, in-house. All those services are within a one-phone-call solution for our clients, which is headed up by the local CFP client relationship management team servicing the clients out of our 31 local offices.

We started our family office business model back in 2012. So, we’ve been doing it a number of years. The primary reason that we launched those services was to create more value for the client. So, the family office service model was born out of doing more for our clientele. They were demanding more. They wanted more value. They told us they were “time broke” and that they wanted a one-phone-call solution. We live in an on-demand world, right? “I want it and I want it now!” That was the philosophy in building the family office business model. It’s worked great. Our clients are extremely happy.

LYNCH: Great point, that is “people, including advisors, value their time.” Advisors we interact with through our consulting practice often find managing the competing priorities of client service, growth and running their businesses quite challenging. As a result, many look to their industry partners to help meet these challenges. Dave Patchen, tell us how Raymond James is addressing these issues.

DAVID PATCHEN: I’m David Patchen from Raymond James. I head up a team that leads our education and practice management efforts at the firm. That comprises our practice intelligence internet site and a team that trains the branch associates, which supports the financial advisors. We also have a group that puts together the curriculum for conferences and events (not the behind-the-scenes logistics — we have a separate team that does that, but on my team it’s the people that actually do the professional development slots).

We are especially proud of our coaching, which is something that we’ve spent the last year taking to the next level. In fact, we are up for an award tonight at the Wealth Management gala for the Advisor Master Program, the AMP program, which is our approach to closing the demographic gap, bringing in that next generation of financial advisors to be more experienced practices.

LYNCH: When you are doing the education and work with the advisors, how do The 3 C-Drivers factor into the design of the curriculum or what the advisors are looking for from Raymond James?

PATCHEN: I would add to what Dave has already shared. We really see complexity and pace of change in multiple areas as the macro drivers. In the consumer’s mind, they, the advisors, are educators, but, in our mind, as financial services providers, it delves into the details of what they are consuming. So, we talk about from a training standpoint, three levels of knowledge. People know what they know, they know what they don’t know, and they don’t know what they don’t know. Our belief is that third bucket — the amount of information people don’t even know they don’t know — is growing and, frankly, it’s growing at an exponential rate.

Our training is focused on connection and clarity. So, connecting human-to-human where there is likability and trust; and then how you drive clarity is by helping people understand that they lack clarity. We are really big on how we teach diagnostic questioning skills and how we teach active listening. We think that’s where the opportunity now and moving forward with these macro trends is really wide-open because we believe the more the competition, the more complexity, the more they really don’t know what they don’t know, and the more wind is behind financial advisors moving forward.

LYNCH: Thanks, David. Your firm is leveraging technology as well to deliver training and supporting the overall practice management program. Technology itself is also a good differentiator. I want to explore that a little bit more as we get into the other topics.

So, Mercer’s client-service model is both a function of consumer preference (family office services) and a long-standing commitment to putting the clients’ interest first. Of course, RIAs depend upon their industry partners to provide support for that type of model, including technology and access to data. That’s a great transition to Morningstar. James, please tell us about your role and provide some insight regarding how Morningstar is positioned to address the same challenges.

JAMES CARNEY: I’m James Carney, head of business analytics at Morningstar. Morningstar has somewhat of a unique position in the marketplace because we deal with data and research; we provide solutions. We are in different markets such as retirement. It’s really a multifaceted firm. We are almost a billion dollars in revenue with about 4,000 employees and that’s all happened over 30 years.

What is key to Morningstar, the mission really, is that the investor comes first. So, it’s investor first. Everything has to drive value and benefits to the investor.

We have on Morningstar.com probably ten million unique investors that come there daily or nearly every day. We have close to three hundred thousand advisors that use our products — fifteen hundred in asset management firms and a number of institutional firms. We really have a wide look at what is going on in the industry at large. So, when you are talking about changing consumer and advisor expectations, I agree: Things are changing daily. On the consumer side, the group that has been left out of the technological change has been the ultra-high net worth. You might think they’d be getting the best technology first, but they really haven’t. So, in terms of Dave’s focus on family office services, that’s an area right now that everybody is looking at. “For the ultra-high net worth, how do I bring those tools and so forth to them?” We see that, hear that. I’m on a board of a very large family office. It’s fascinating; some of the largest part of the market is being underserved.

So, investors are changing. Consumers are changing, and the advisors that are serving them have to change, too. Some of them aren’t changing quickly enough, in my opinion, but they will need to in order to hold on to those consumers.

LYNCH: We were talking a little bit before we got started about some of the work Morningstar is doing, particularly in the area of helping advisors understand investor preference through investor polls and some of the other data they have access to. I look at it and go “Wow, this is fabulous.” I want to dive into all of this.

James, you mentioned earlier that you’ve got to know where to start, what’s relevant and how do you approach and think about that. Morningstar has access to an unbelievable amount of data but only so much of it can be consumed by an advisor or an end client.

CARNEY: That to me is the core. The data side of it, that’s all part of the digital world. I actually want to do something with this data, here are the questions and I have the data but what are the questions to ask. What is going to help me drive my business better? What is going to help me make a decision on a strategic direction? So, it’s that whole mindset and now that it’s more and more available.

You know what is really driving it is the whole digital transformation of our society. A lot of these advisors and the firms supporting them want to understand the data, but most can’t make those investments. They are, however, smart enough to realize they need to do something. That, from our view, is what we see that is really behind this whole digital transformation — that advisors can see the writing on the wall and decide either “I’m going to go it alone and make those investments and do it” or “I need to hook my wagon to somebody that can do that and I can be really good with my personal relationships and other valuable brand.”

LYNCH: Let’s go back to some of the initiatives that Morningstar has launched, particularly around the investor polls, tracking investor results compared with or in lieu of tracking benchmarks. I would like to get your thoughts on that because when we talk to some of our large broker/dealer or RIA clients that are embracing, for example, rep as portfolio manager, this comes up. What are your criteria for allowing a rep to manage money? They have a criterion, but I don’t know if they are actually able to say, well, the rep’s performance compared with x, and I know there are some tools that start to get there, but I think that’s an area where we should chat.

CARNEY: Yes, and that’s what we are doing today. We are in pilot mode with a good-sized brokerage firm and essentially what we are doing is we are taking all their risk tolerance questionnaires, adjusting those, and taking all their data on all their clients and then we are doing analytics. Not only can we say what the performance is and so forth, we can say what the performance is versus the risk that client wanted to take. You’d be amazed that we’d come up with something like, here they have great performance, but they were invested in oil and gas and they are a conservative investor. So, there is a big miss on the fit, right? Here I am as a rep where I can create my own models and all the rest, but how would you have done if you just took the firm loss. And we show once again: here is the math, and by the way, even with all the work that you did you would have been better off going with your firm’s models. You were outperformed by lower risk. We have this at the home office level but ultimately you drive that down. So, as a rep I can see that. So, how can I argue with the numbers? If you’re not doing as well compared with peers. Those are the types of analytics that are now available.

LYNCH: It’s particularly fascinating when you think about the regulatory environment and the fact that you can ask this to this data. It says something to SEC, FINRA and others that we might not put a set of requirements in place that the industry might find challenging, but the data is there. That is part of the key takeaways or at least the information I’ve seen.

CARNEY: I think what enhances that shift is really thinking about goals versus investment performance. What are the goals? What are the client’s goals? I can tell you even from the younger generation, which I have a few of them, our goal center is about what they are trying to achieve. And how they do that is they want to work with people that know what they are doing and do it the most effective way. Whether they do it themselves, they outsource it, or whatever. Goals-based planning is really changing perspective.

PATCHEN: My question, not just to James, but to the industry at large, is okay we have that data, how much real behavior change is that going to drive through planning with financial advisors? For instance, take the opposite scenario that happens many times at major firms where they aren’t necessarily keeping in mind the advisor and the performance line risk adjustment basis; they are using the firm’s models. The firm’s models could be performing fine but maybe the advisor is doing something alongside that in their own models and they feel like they are outperforming. Does that really make them change one way or the other? I can tell you from a lot of one-on-one coaching I do with advisors that they get so wrapped up in how they manage money. But that is a real obstacle, for them to sometimes punt it, even when some kind of data you are speaking of, James, is presented. Is that a fair statement?

CARNEY: Absolutely. I don’t think people who have been doing something for a long time suddenly see all the data and say “okay I’m going to change now.” But it’s a process and it’s going to take time; but, ultimately if you are looking to do the best job for your investor, that is really your job versus I’m trying to be the best portfolio manager. They are not necessarily the same thing. When you are seeing data after data and reviewing it, after time maybe you should say “I really should look at modifying my behavior a little bit because this makes no sense for my client.” That is really what it gets down to. I think many advisors don’t have that level of information to know what really makes sense for their client. They are doing the best job they can with what they have.

PATCHEN: One driving factor that I’ve seen to get them to change is when they start to quantify and measure how much time and how much money they are spending, and their team is spending, building and managing those portfolios. When we start to put a cost to that, both time and dollar-wise, and they recognize through the data that there really isn’t as much there as there should be, they are even more inclined to make the change.

BARTON: I would 100% echo what David and James are saying. I come across that all the time when I’m talking to firms where the seller, the founder, is wearing multiple hats. He is the advisor and investment manager. They are explaining their investment philosophy and how they do things and “here’s my empirical research, here is my firm philosophy” and as we dive into it I say, “You believe in behavioral science, correct?” “Of course, I believe in behavioral science.” Then I go on to say “well you know that’s what financial planners they do is they deal with the behavioral science biases that every investor has and it’s our job to uncork that and expose that to them and say you are making a knee-jerk response to a particular situation or set of facts. But if you take a step back, you can see, perhaps, that you are doing the same thing. You have a bias on your investment philosophy and the information you provide helps hold up that mirror.” Then I talk about how at Mercer they’ve got a 14-member investment committee made up of nine CFAs, six PhDs, and this is all they do. Finally, I say, “Do you really think you can compete with all of that? And have all the tools, all the access, all of everything? No!”

LYNCH: So, Dave, it’s busy out there in terms of folks trying to acquire other advisory firms, right? There are a number of different players out there. In addition to providing world-class investment capabilities, what else do you think about that in terms of the competitive landscape?

BARTON: Yes, we are in a hyper-competitive market. So, the question becomes, how do you stand out in a crowd? Seems that everybody is in an RIA or they are an investment manager. Some do financial planning, and some do not. When you’ve got competitors who are buying RIAs and hybrid BD reps plus RIAs at the local level, it gets tough. So, you have the RIA down the street that wants to buy their competitor RIA. You have regional players in the market. You’ve got national players in the market. You’ve got aggregators and integrators with so many different philosophies out there. There is no shortage of buyers. Turns out that the family office business model that we’ve been doing for a number of years is the value extension. We have a very high client retention rate and that’s certainly helpful when it comes to mergers and acquisitions. It is the competitive differentiator that gives Mercer an edge.

LYNCH: That is a great point. So, Dave, going back to the initiative in growth through acquisition and competing as we talked about in a very crowded space...to David’s and James’ points, you have to be credible and relevant to that end-advisor. In addition to having a framework that is attractive to them to just get in the door and have a conversation with them. Obviously, the growth that you’ve achieved is out there facing a lot of other competitors that are trying to do similar things. That is true of a lot of firms we could mention, but all three of your firms among more that 600 nominees for this year’s Wealth Management Awards are finalists. Being a finalist is and really says something that you have been impactful.

When you think about the sustained success your firm has had through acquisitions, your approach is unique in that you talk about integrating all your offices and clientele into the family office method you described. So, when you think about the competitive landscape, there are a lot of your competitors that are acquiring firms and don’t use terms like integration. They say something like, “look, we are going to provide capital and leave you alone.” The fact that you say right up front something like, “we are going to bring some value and integrate,” strikes me as unusual. I wonder if you can comment on the thinking behind that approach and strategy.

BARTON: I think what we’ve been talking about so far and what everyone has mentioned is all interrelated. Our message of integration when buying a firm and having that difficult conversation with the seller is saying, “you know you’ve built a wonderful company, but we are one brand, one company.” We are right away starting a conversation that’s basically saying to that seller that things are really going to change. “So, my name is not on the door anymore?” “No. We are telling you that’s going to go away. We built a national platform business much like Raymond James and you have to fold into that. We standardized and templated a lot of our processes and workflows; we need to make sure we have the same high-quality customer experience in Tampa as we do in Seattle and Chicago and everywhere else we operate.”

That doesn’t mean we don’t learn from every single firm we partner with; we do. In fact, many times they have best practices that we love and modify, and we push out nationwide and they become part of our best practices. So, integration is a difficult term. It’s a difficult message. How we overcome that, Matt, is we say, “look, you are a great firm and this is the footprint you have today, but think about what you could do if you didn’t have the burden of dealing with the back-office functions that you are dealing with today — your accounting, your HR, your compliance, trading, you name it. What if you didn’t have to do that? What if you didn’t have to do all those other things you hate and you return fulltime to those things that you love that got you into the practice to begin with, which is serving clients.”

LYNCH: So, it’s to enhance the client service model.

BARTON: We are unlocking the time and talent for them in a very big way. We add the family office services; but the secret sauce that makes it all work is before we started doing M&A we had to be extremely focused on robust organic growth. We didn’t rely on mergers and acquisitions. We’ve been one of the fastest-growing firms, RIAs, in the United States since 2013. In 2017 we brought in 850 new clients and 2016 we brought in 950 new clients. So, we were doing quite well just organically. It’s news to the ears of most RIAs who aren’t experienced in that kind of growth. Most RIAs, as David knows, aren’t experienced in that level of growth. On a net basis, excluding market — if you assume a 4% distribution rate of a book of business because of people and retirement — you are talking about a 2% net growth rate on average for RIAs. So, when they join the firm, we can grow them and the footprint.

LYNCH: So, part of the value proposition for the seller, is that associating with Mercer accelerates growth?

BARTON: It creates opportunity for the seller. It creates opportunity for the career path, optionality for the staff of the seller. So, that’s the winning message that we combined with the technology and training and knowledge transfer which David explained beautifully. I loved your part about the AMP program, David; it’s all part of the puzzle.

PATCHEN: What Dave said is a perfect example. Now we are talking about investment advisors as consumers rather than the investment population consuming financial advisors and their offering. If their firm is looking into the marketplace, advisors are going to approach their offer for their conversation three different ways. Probably, I’m not interested at all and I’m never going to do that; however, some of those advisors don’t know what they don’t know. So, when Dave and team start to dig in and say “have you thought about this? What about this? When you think about your name being on the door and think about the valuation of your firm moving forward.” When they start to create that awareness that’s when the opportunity starts.
You mentioned something that we call “intellectual capital capture.” The real value for advisors is learning from each other, especially learning from those that are making it happen right now. We believe our job is to create an environment where advisors are comfortable sharing. When they make an acquisition and they take in some of that intellectual capital and it sharpens their saw and deepens their offering — and correct me if I’m wrong, Dave — you are selling to the other folks out there that think they are not interested initially but after starting to kick the tires and look under the hood they say, “Hey this might be a really good next step too in my business evolution.”

BARTON: 100% agree, David. To that end, we have something similar at Mercer University where we do case studies on various client issues and we have an institutional knowledge bank going back thirty years where they can pull out a case study or consult on a study on a particular issue that they can share. The advisors all come with a specialty. I personally specialize in working with families that deal with children with disabilities. That’s the institutional knowledge that I bring to the table. So, if I was just joining, we’d say “great, now you are our subject matter on dealing with children with disabilities and we are going to press that out there to thirty-one offices.” I couldn’t agree with you more: CFPs by nature are scientists and they love to take deep dives. They love data.

LYNCH: David, I think you were leading a succession program at Raymond James a number of years ago, so you’ve done a lot of work and your team has done a lot of work around succession. A number of firms that we’ve worked with when this starts to bubble up is when the next generation has no interest or capability in managing money, then they are challenged as they start to think about the story to their clients when they are going to step out or away. The client is thinking “wait a minute — you told me you were the smartest person on the planet that you sold me on out-performance. So, now if you are not going to be there, is the value proposition still there?” And, if you are acquiring the firm, you might say, “Are the clients going to stay?” It starts to become much more real, in part, because they realize they may be losing value. They also start to appreciate the fact there might be other options and delivering value to the client service model that doesn’t involve me sitting in a room trying to pick stocks or whatever.

PATCHEN: What we are seeing as a progression of the value proposition and goal conversation is goals beyond financial goals. One of the awards, and I’ll give a little plug for one of my sister divisions, Wealth Solutions Group, built an industry-leading offering in the longevity planning space and aging in place. I just came from my mother’s funeral yesterday, she passed away from Alzheimer’s, and seeing my dad as a caretaker and what he’s had to go through and identifying the facilities and recognizing when we need somebody in the home and how frequently we needed somebody in the home and then resources with health and equipment in the home to prevent falls in the shower and so forth. Those are value-added conversations, and the well-equipped advisor can take that value proposition to the next level. As you mentioned James, it’s not a performance conversation anymore.

BARTON: When you are a Certified Financial Planner sitting in front of a client, you don’t just jump in and talk about investment management — that’s the exact last thing that you do. That’s just a tool. You are doing the financial planning, you’re doing the self-discovery with the client and it’s the plan that informs the investment strategy and not the other way around. It’s all about the balance sheet with the client. How do we increase the balance sheet of net worth for you, your household and everything that is so about your lives? That starts at the very beginning in talking about you don’t know what you don’t know. Well, that’s our job — to educate them. That’s where it starts.

LYNCH: I have a few specific questions I’d like to ask and James we can start with you. Throughout the industry, not solely specific to Morningstar, what do think about when it comes to competitive changes or competitive threats? Things that you see from your perspective and being in the industry a long time. What do you see on the horizon that could be a problem for our industry?

CARNEY: What I think are fundamental problems in the industry, and I don’t have the answer to how exactly to solve it, is lack of education. They don’t even teach you how to balance a budget in college. They don’t teach you about financial basics 101. I’m not talking about bond ladders and so forth. The industry at large has to say “how do we do this? How do we get some knowledge and basic knowledge to these folks?” Guess what? Not only is our job easier where we can talk to them, they will understand basics, all those things where nobody teaches you anything. When you go to an investment advisor it’s shocking what you don’t know. It’s an industry problem. I think the industry has to figure out how to educate folks to a certain point. Then they care about saving and caring about investing. To me, it’s a core problem.

LYNCH: Do you think it’s the next generation not being informed?

CARNEY: Absolutely, and that then opens things up for other folks to get into the market because consumers have no other education and they think,” oh that looks good — Amazon just opened up Amazon Financial Services. They do this, this, and this and because I buy a lot of stuff from Amazon, I’m there and know I can trust them or Google…” It’s a whole raft of different things.

LYNCH: So, once a week it seems my kids send me a text about some app they’ve seen where returns on stocks are guaranteed or investing is free, etc. “Why don’t you do this, Dad, they’d ask.” At least they’ll ask the question, before they put money in. Same questions, David. What’s your view from competitive threats or challenges to financial services businesses.

PATCHEN: We definitely see technology and the complexity / cost of technology as something that we continually need to stay ahead of. When looking at a several hundred-million-dollar technology budget when planning for a coming year, we know that type of spend is necessary to stay competitive. Another challenge when we talk about demographics is how is the client of the future evolving? We feel there’s a gender trend and impact moving forward. Women having more control and also changing the complexities so to speak of the investment population.

I would tell you finally, our industry has been built on wealth creators as clients. This next generation, all of this wealth is going to be passed down and we are going to have wealth inheritors as clients. It’s the most educated generation and generation with more access to information than in the history of our time and planet. How are they going to respond with inheriting that wealth? You have that “shirt sleeves to shirt sleeves in three generations” element that plays into it. You have a generation that doesn’t initially seem in many cases to delegate as easily as the Baby Boom generation and they are going to have a lot more options thanks to technology than past generations. It’s going to be interesting to see how and targeting and positioning are going to be really important for us and other firms moving forward.

LYNCH: I agree with all of that. One of the things we’ve been talking about are the challenges of the smaller firms keeping up with the changing landscape and, especially, technology. As a firm, David, your tech budget is in the hundreds of millions of every year. I’m sure Morningstar’s is similar. When you think about just keeping up with technology and requirements for some firms that are out there on their own, that’s a significant hurdle. But beyond that, if I’m thinking about it in terms of the board level conversation, thing might shift a bit.

For instance, I’m on a number of boards where management will come and present an idea. You want to spend 10 million on this initiative or 100 million or whatever it happens to be. You make the best decision you can with the information you have but when you are spending hundreds of millions in your tech budget anticipating changes in behavior and how advisors are going to react to the connective advisor tool or other tools such as those provided by Morningstar, well, those are significant decisions. To make those decisions and to anticipate “what’s likely to be the behavior? How’s the next generation investor likely to respond?”

Here’s your point Dave, “how do you think they are going to invest? What is the advisor going to want from our firm?” You are developing this technology over a period of years, spending incredible sums on it. I think the purpose of meetings like we are having today is to talk about it on a strategy level and at a capital decision level. These are long-term bets. You have to be willing to think about these decisions in the context of macro trends, including the 3Cs; that’s the focus of many of our board level client conversations.

For example, at Mercer, your thesis is that you’ll continue acquiring and putting the capital to work by acquiring other firms and anticipating that they are going to embrace your service offering and your family office model. So, I’m interpreting, that as a long-term ownership strategy, that is intended to provide a return on capital over a long period of time. So, I think for all three firms here today, that’s a common time horizon, perhaps thinking in terms of 5-10 years out to make the capital decisions.

We also have to keep in mind that we are making decisions based upon data out there that is not always complete or perhaps not completely accurate. There is competing information when we read articles from a variety of places that have data that is not consistent. So, we find Senior Executives or board members making the decisions seeking help to sort through the data and interpret these trends. They need education, data, and connections to peers to help them or other executives around them to help them understand how they are evaluating those investment decisions. This roundtable conversation helps us to do that. It helps us to have that conversation. Helps us to create that community. I greatly appreciate all three of you taking the time to do this.

 

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