Kurt Dupuis:
Welcome to The Whole Truth, where two wholesalers help financial professionals build great practices and thrive in a rapidly changing industry. We'll bring you the stories and voices from those on the front lines of this change and we'll have some fun along the way.
Steve Seid:
This is more than a podcast. We're building a community of financial professionals who are growing, forward-thinking and want to get better. Thanks for listening and contributing to the discussion.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments.
Steve Seid:
And welcome everybody to the Whole Truth from the Bay Area, California. I am Steve Seid.
Kurt Dupuis:
And from Atlanta, I am Kurt Dupuis.
Steve Seid:
We've got our buddy, Patrick on. Patrick, you want to jump in, introduce yourself, why you're here, who you are?
Patrick Farris:
Patrick Farris, been wholesaling in some sort of former capacity for a little bit over a decade. Just hit my one year anniversary with Touchstone on the 13th here, so pretty excited about that.
Kurt Dupuis:
There you go.
Patrick Farris:
Out here in Denver, covering the Mountain Territory. Big piece of land here. It's the Four Corners, Wyoming, and then we threw in Las Vegas just for fun. I personally think it's the best territory in the nation, but I'm sure you guys will disagree with that one.
Steve Seid:
No, it's a cool territory. I always thought when it's in the winter you can go ski, but you could also get out of the way to Arizona and in the summer you could be up in the mountains and I mean, seems like-
Patrick Farris:
Exactly.
Steve Seid:
Yeah, it's a pretty good geographic footprint, I would say.
Patrick Farris:
Yeah, it's starting to get cold out here. We actually just got some dusting on some of the higher peaks.
Steve Seid:
Nice.
Patrick Farris:
In the mountains here.
Steve Seid:
Ski season's coming. So Patrick came to us, said, "Hey, I want to talk about COIs. There's opportunity to improve or think about it a little bit differently, so that's what we're going to talk about with Patrick. On the front end here, I had an opportunity to hear Barron's come speak at our home office this week, and they shared a whole bunch of things about advisor trends. In this intro segment. I'm not going to go through everything we make, Kurt and I may go through more later in terms of what they covered. But basically what this was, was they looked through their Barron's Top 100, which are some of the biggest and best advisors in the nation, and there're all kinds of criteria for how they go about doing that. Again, which we may cover in the future. Guys, you haven't heard these trends before. There's four of them.
They're not earth shattering, but I'm curious if you know your response to each of them and what you think. The first seems very obvious, is that teams are the future. These Barron's teams are building infrastructure and the big thing that they talked about there, was not just the size. It’s if you're working at a lot of firms, let's talk about a wire house for example. Those firms are given all these different new tools and offerings, and so you're building these teams, not just to be able to help with service, but also to be able to maximize what these firms have to offer. So, seems pretty obvious, right?
Kurt Dupuis:
It's definitely obvious, but I'm struck by, I think it was Weylman said in a recent interview, that we've gone this direction of teams, yet we don't have a lot of processes for building out roles and responsibilities.
Steve Seid:
Right.
Kurt Dupuis:
Seems to be a lot of redundancies not having a similar or scalable process. So we're at sort of this crunch point where we've gone from a bunch of solopreneurs to teams, yet a lot of our structure is still built around the solopreneur.
Steve Seid:
One of the things that the Barron's folks were talking about is that these Barron teams are thinking about is retention. You know? Got to build a team, but it's becoming harder to recruit and retain. So there was a lot of talk about equity compensation being used now as a way to keep people in the seats. I asked the question, "Is equity going down to the sales assistant arena?" Because quite frankly, I think the thing that I come across most often is people needing to find really good sales assistant talent. And so-
Kurt Dupuis:
There's been a lot of movement there post COVID with “the great resignation” that there's a lot of chess pieces being moved around from personnel and staffing perspective.
Steve Seid:
I mean, his comment to me was, he's not coming across people that are a given as sales assistants. But my comment to anyone listening is, you get a good one, you got to think about how to lock them in, develop them, because as we know, as important as anybody else on the team.
Patrick Farris:
Yeah. You hear about top notch assistants and how great they are and how they keep the glue of the team, so important to keep them around. Especially, I mean offering equity or just everyday typical benefits like the ability to work from home.
Steve Seid:
Yeah. Absolutely. Okay. So obvious, one, teams of the future, but good dialogue there. Let's get into number two, which has implications for our business, but I do think it's true. Investing is table stakes. Let's just say you're charging a 1% fee. Barron's estimation of what the investment piece is, is about 30 basis points. So that means what you have to do is find 70 basis points of additional value. And there're all kinds of ways that they shared about how teams are doing that.
Kurt Dupuis:
Part of this is the “quiet part out loud”, and I tell people this all the time, it's like, look, "The reason why I focus on practice management is because that's what should be important to you." The investment side. Everyone that sits down here should have decent product. And if you look, I mean CFA Institute and countless academic research papers have said asset allocations, 80% of where returns come from. So we're spending a lot of our time and effort on the manager's selection talking about that 20%. So you start whittling down that 1% of value. It's like if wholesalers are just vendors, then that should not occupy a big part of your brain base. But if they're a partner in how you do things and they can bring deep expertise, subject matter expertise, that's a different conversation.
Steve Seid:
I totally agree with that, clearly. I also don't want to minimize the investment piece because even though in terms of what a wholesaler can bring and what an advisor can bring there, I still think, even though it's 30 basis points, even though it's table stakes, think about what the firms are doing right now. They're making them go into these generic models with the largest funds out there.
Kurt Dupuis:
Over diversified.
Steve Seid:
I just think there's still an opportunity to differentiate there. So while I agree with it, I also think, "Well don't read that." And say, "Okay, well that doesn't mean anything either." Right? Okay. So number three, and we'll go through this relatively quickly because this is an obvious one I want to spend more on the fourth one actually, is defined value propositions are paramount. So to be able to explain what it is that you do, why you do it, and why that's important. And this is where they get into something that we talked about a lot, which is the niche market or the target market. What the Barron's people said is, "The people that sit on that list are generally not generalists. They've got a market, they do it extremely well, they service it extremely well because they know it very well." That's what you see at the Barron's at the top.
Patrick Farris:
Yeah, I've heard so many different value props just across the industry. Some are good, some are all right. But I think where you can tell that a particular advisor knows what they're doing is that ability to differentiate and explain what they do to bring value to their clients, whether it be a niche client set, or just a particular industry.
Kurt Dupuis:
I'm also struck by what Weylman said because that's a newer episode, it's fresher on my mind, but the term Value Proposition to, what did he say? Value?
Steve Seid:
Value Promise.
Kurt Dupuis:
Commitment? Yeah.
Steve Seid:
Value Promise.
Kurt Dupuis:
Value promise.
Steve Seid:
Yeah. Because who wants to be propositioned? First of all, right? But also, where's the proof statement? So you say this is what you're delivering, but how do I know that you're actually delivering that? How many advisors use some sort of investment acumen as part of the value proposition, even though we just said that's sort of table stakes?
Steve Seid:
Yeah, absolutely.
Kurt Dupuis:
Is that a material differentiator? Impressive to me.
Patrick Farris:
Or things like a financial plan? I believe that a lot of the firms out there offer canned financial plans, but is that something that's really differentiating you as a financial professional?
Steve Seid:
There's a way to do it, but you can't just throw that we do financial planning, because that's certainly not different.
Kurt Dupuis:
Or you check the box and you move on, you talk about something that it really develops a connection with someone.
Steve Seid:
We're not saying you can't differentiate with financial planning because you can certainly move past the generic stuff and do it really well. And I think-
Patrick Farris:
Yeah, absolutely. And I think it'll cascade into our conversation that we're going to have on Centers of Influence.
Steve Seid:
Yeah, absolutely. Good teaser there, Patrick. So the last one, multi-generational emphasis in both staffing and prospecting. What they also added to this is just team diversity. And the thing that Barron's people were talking about is how much success women are having in our industry right now. You're seeing them have a greater proportion of the Barron's top list than they represent in the industry itself. I'm sitting there and I'm thinking, "You don't have to..." I hate when I start to think about, "Well you have to include this type of thing, you have to include that." But if you don't have a woman on your team and you're adding staff…, it's not a terrible thing to think about.
Kurt Dupuis:
I think about that in terms of just authenticity. Women exist in our lives, minorities, so underrepresented group, they all exist in our lives, yet they're not often reflected in financial services. And then the proof statement of that is looking at team websites and how generic they are. It's looked like they're standing on the steps of the courthouse. They're all wearing blue suits, they look exactly the same. Yet that is often not the world in which we operate.
Steve Seid:
So it's really funny you say that. I had to jump in because the guy was talking about, okay, when I go on a particular website where it was all men and it was there, they were all kind of older men, I would do business with that. My daughter looked at that and goes, "I would never do business with..." It made her nervous just to see no diversity, no difference in generation, no women. The point is, the next generation of your investors, which are here, they're going to want to see it.
Patrick Farris:
I think different upbringings and different diverse backgrounds really provide and compliment each other's strengths and just abilities to problem solve.
Steve Seid:
We can transition from here and get started on the COI discussion. Those were the four trends. They make sense, but certainly around each of them there're some things to think about if you're a team and wanting to get to the top of that Barron's list or stay there.
Kurt Dupuis:
So in our chat today we're going to talk with Mr. Farris about thinking about COIs a little bit differently. If you haven't already, please subscribe to the podcast, tell your friends, write us a review, it helps people find the show. And without further ado, here's our conversation with Patrick Farris about COIs
Steve Seid:
And welcome back. So let's get into our discussion of COIs and Patrick, we're going to just jump right into it. Why was this something that jumped out to you? What were you seeing?
Patrick Farris:
I've been talking a lot about COIs just with different clients over the years. We work in an industry where we're able to really build our own business. So why would we not build it with clients that we enjoy working with? A lot of our clients, they tend to gravitate towards people they have an affinity for. And typically those are clients that have similar hobbies or interests, so they start building a book of business around, say, "I'm out here in Colorado, picked up fly fishing two, three years ago and I love it."
Kurt Dupuis:
Atta boy.
Patrick Farris:
So I start and I found myself working with clients that enjoy fly fishing and those clients work with clients that enjoy fly fishing. So why don't we make that more intentional? I think this goes back to the Barron's list, right? Typically, high performers or elite advisors already have a differentiated niche. I think it's fairly defined in the clients that they're working with and the prospects that they're trying to bring on board.
Kurt Dupuis:
I have an uncle who's a financial professional in Louisiana. When he got started, he's kind of on his way out now, he took every CPA in town to lunch. That was developing COIs. So, if we of agree that that's the old school way of doing it, what do you see as the shortfall today?
Patrick Farris:
I think we've fallen into this antiquated school of thought of, "Okay, my centers of influence are going to be my CPA and my attorney." Their ability to drive specific referrals that align with your specific niche isn't there. It's a much more blanketed approach of, "Okay, I'm just going to send anyone and everyone that I work with." Unless it's some sort of specific CPA that works with only a certain kind of industry that you're trying to target. That might be a little bit different. But once you develop that differentiated or that unique niche and then uncovering centers of influence that can drive referrals in that particular segment is a good way to continue to grow your business in a way that is more fulfilling and more enjoyable.
Steve Seid:
Let's look to your fly fishing case then. So how would you think about what a COI looks like there, in that particular space? What would that look like?
Patrick Farris:
You kind of got to sit down and take a deep dive into who are the, say the suppliers? Or my role, I'm the wholesaler to a financial professional who's the wholesaler to clients that like to fly fish. And in my eyes it would be a guide, a really well known guide. There's a gentleman out here in Colorado that works with a lot of ultra high net worth folks that take some fishing, typically fly fishing, guided fly fishing isn't cheap. So what's his rolodex of clientele worth to your business and how do you partner with him to get access to that?
Steve Seid:
I love that though, because what we're talking about is people that are not saturated with questions about being a COI, that person, you could probably just sit there, take to lunch, go have a drink and say, "Hey, here's what I do. I know what you do. Let's trade some ideas." And I don't know, that could be a pretty cool organic conversation to have.
Patrick Farris:
And I think another great example is, Steve, you're right by Napa. How far are you from Napa?
Steve Seid:
I am 20 minutes from Sonoma, about 30 from Napa.
Patrick Farris:
Okay. Do you have a favorite winery?
Steve Seid:
I do have a few of them. Let's see, what's my favorite? Well, now you're getting me on a long topic. I could go here, but let's just say for not necessarily the experience, but purely the wine, Patson Hall would be my favorite.
Patrick Farris:
Do they have a wine club or a mailing list?
Steve Seid:
Yep.
Patrick Farris:
What would it mean to your business to get your hands on that mailing list or that Rolodex of that wine club?
Steve Seid:
That's probably a nice list of people. There's no doubt about that.
Patrick Farris:
And folks that enjoy the same wine you do. So you already have that commonality there. I think if folks just kind of took some time to really take a deep dive into their book of business and reflect on, "Okay, these are my best client, these are the top three clients. What do they enjoy doing and what do I like doing with them?" There's your differentiated niche.
Steve Seid:
So if we take a step back, the first thing you would say is to just think about the specific areas and then think about what the advocates could be within that area.
Patrick Farris:
Yeah. Absolutely. I think you just reflect a little bit deeper into your book of business and determine what are those differentiated niches or where's the affinity? What are the hobbies or interests among your top clients that you also have? And then from there determine, "Okay, who are the suppliers or wholesalers or who are the folks that cater to that particular group?"
Kurt Dupuis:
So after identifying, let's say a new COI or new referral source, how do you think about developing that person? How do you get him to the point where they're actually sending you business and referring you?
Patrick Farris:
I go back to your all's podcast with Dr. Rick Jensen when he was really talking about building advocates. You can't just go to your centers of influence once identified and say, "Hey, let me buy you a burger and beer." I think it's twofold, you need to be able to have that differentiated value prop of why they should work with you, and you also need to think, what are my personal and business strengths that I can help them, them being the COI, achieve their business goals or their initiatives?
Kurt Dupuis:
I remember advising teams of that years ago sticking with, let's call it the traditional COI source being CPAs, and it's like this, these were young-ish financial professionals. So it's like, look, a 65 year old CPA who's been in the business for 40 years is likely, they probably have a great rolodex, but think about the moat around them for you getting in with their clientele. What about someone similar age, similar demographics that's growing that you guys can have a relationship for a long time and both grow together. That's the scenario for a win-win that you're looking for.
Steve Seid:
It's a good time maybe to transition. Talk about that worksheet that you created.
Patrick Farris:
Yeah, absolutely. So through my conversations, I think a lot of people just get stuck getting from point A to point B. We've identified what our niche is, we've identified who those centers of influence may be. But it's like, "Okay, how do we get started and how do we get to that end point of where we're starting to receive referrals?" So this particular document that I created is more of a roadmap or an action plan where you can take step by step and really take a deep dive. A great one is medical device sales reps. So where am I going to come in contact with a medical sales rep? What do they enjoy doing? What are some of their professional or continuing education requirements? What kind of groups or academic groups do they belong to? And then from there it's like, "Okay, what's the action plan? What's the value prop to them and how am I going to help their business?" So it's just really a roadmap to help financial professionals figure out how to get from their centers of influence, uncovering their centers of influence to starting to receive those referrals.
Kurt Dupuis:
I need to go on a couple of tangents here. There's a bit of a prerequisite to all of this and then not all, but most, is you have to have some sort of niche expertise or niche hobby. Marketing is largely about finding a passion or purpose thing and attaching some dollar and activity to, that's marketing. That's how you build a marketing plan is finding those things. So really we're just taking a step back and what are the things that I enjoy doing? What are the things I'm spending money and effort on in my personal life and in finding people that could help me in my business where we can develop some sort of mutually beneficial thing. That's my second rant. And my third, do you remember one of our first episodes, we talked to Penny Phillips, and she introduced the idea of psychographics?
Steve Seid:
Mhmm. Of course.
Kurt Dupuis:
So we know what demographics are, right? It's how the census bureau and marketers group people by whatever age, ethnicity, education level, think of them as external factors. Psychographics is doing the same thing, but internally. So how people think, people's attitudes, aspirations or other psychological criteria. And it's being used heavily in social media advertising to target people. But if the more you can get in the minds, and this goes for potential clients, but also COIs, the more you get through the mind of how someone is thinking. For instance, they wake up in the morning, when do they wake up? What do they do? Do they exercise first thing? Do they look at their phone first thing? What are their aspirations? Are they worried about their kids and whether they're going to college? Or are they worried about paying for their kids daycare? Just really understanding the mind or the thinking process of your niche or your COI that you're going after, strikes me as extremely important in this conversation. It's like understanding what makes them tick on the inside.
Steve Seid:
Patrick, this was awesome. I really think the summary and the takeaway here is really easy. I always hear financial professionals talk about COIs, but can you go about it in a different way? Can you go about it in a way that is more natural and much more effective and creative? I'd love to hear some feedback from our listeners after hearing this. I'd love to hear those individual stories. That would be fun. So thanks to our guests, Patrick Farris, really appreciate you coming on man. Thanks so much.
Patrick Farris:
Yeah, it was a blast. You know I always enjoy catching up with you fellas.
Steve Seid:
Yeah, and if you're a listener in his territory, touch base with him. Use Patrick dot F A R R I S@touchstonefunds.com, right?
Patrick Farris:
Yep, you got it.
Steve Seid:
Absolutely. We'll be right back with our Costanza Corner. This is The Whole Truth. Stick with us.
Kurt Dupuis:
And welcome back to the Costanza Corner where we like to end the show on a high note. Steve-O, you're up. You're not Steve O .
Steve Seid:
I could be Steve-O. We had a Steve O, but I've been known to be called Steve-O from time to time, just not necessarily at Touchstone.
Kurt Dupuis:
Where does the O come from?
Steve Seid:
Just generally people that are called Steve, sometimes people just-
Kurt Dupuis:
Steve-O?
Steve Seid:
Call them Steve-O. Yeah.
Kurt Dupuis:
Stevie.
Steve Seid:
Yeah. Well no. Only my grandmother can call me that and she's passed so no one gets Stevie. That I will correct.
Kurt Dupuis:
I can't do Stevie.
Steve Seid:
That is correct.
Kurt Dupuis:
I can't call you Stevie? Come on.
Steve Seid:
No, no, no, I cannot. I cannot. I don't like Steven with the N either, to be honest with you. Apologize if there's any Stevens listening because I know there are a few that do listen to the show. It’s different!
Kurt Dupuis:
So, on brand for you. So on brand…
Steve Seid:
Just not for me. It's just not for me. Steve, that's good enough.
Kurt Dupuis:
…To get worked up about how somebody says your name.
Steve Seid:
Yeah. Anyway. So some good news. So a lot of you that listen to this know us and know me and my job has evolved a lot over the last couple of years where I do the show, but I also do run Northern California. I have a player coach role. So there's a lot going on and at some point I was thinking I probably got to bring in additional resources in Northern California to help. I brought somebody new on, it happened organically and I'm really, really excited about it. When I first moved to Northern California in 2015, I think it was, the end of 2015, there was some established wholesalers and you get to know him and one of those people was a First Trust guy. His name is Matt Whall and I just started seeing him at a lot of different events. He was like an institution. He was just a really, really well known wholesaler.
And so you fast forward and we kind of reconnected and he was looking and he came aboard and we had to do it quickly because he was in a position where he was being recruited by a couple of other firms. But the bottom line is, got to hire Matt Whall, who's going to help me in Northern California. I'm not going anywhere, I'm going to still be doing lots of things in that territory. But I don't know, man it’s great. It's a really exciting thing for me to be able to bring him on board.
Kurt Dupuis:
I bet. Well, it sort of speaks to your evolving role. I love the perspective when people go from other shops to our shop because I feel like what we do is pretty unique. So it kind of takes a unique person, or at least someone that's open to being unique, to work with us on our side and just another sign of growth. I mean we can both talk about how much this place has grown since we've been here. Me at almost six, you at a lot longer. It's fun to be a part of something growing.
Steve Seid:
That's a really interesting point there.
Kurt Dupuis:
Thank you.
Steve Seid:
It's Matt. You always do that. You have interesting things. That's your thing. He worked, at not too many firms but with three really, really prominent firms and well known brand name shops. And he was just at the point of his career, and it's easy to say this, but he actually lived it because he turned down other jobs to come to us, where he is like, listen, culture matters, what is trying to be achieved matters, how my day to day life is, matters. And you're right about it, that being-
Kurt Dupuis:
Those aren't big stretches, that's what normal people look for.
Steve Seid:
I know, but you got to understand this. Well, you have a little bit more, a lot more perspective because you came from a different firm, now you were doing international, but I only know us. That's the thing.
Kurt Dupuis:
Yeah.
Steve Seid:
And I think that we have an incredible culture and I think that our management team does a really, really great job and it's a really great place to work. That's what I think. But I don't know anything else. So I could be just drinking my own Kool-Aid here, but-
Kurt Dupuis:
I mean you, you know what the plural anecdote is, right?
Steve Seid:
What's that?
Kurt Dupuis:
Data.
Steve Seid:
Yeah.
Kurt Dupuis:
You've got enough data now that enough people are around that have been at other shops, that you can start connecting those dots yourself. Because so many people say the same thing that come from other places. So it's not like this is happening in an isolated way.
Steve Seid:
Yeah, that's great. So you guys are listening to this, if you're listening to right when it comes out October, 2022. Matt came on in September, so just super thrilled. We'll have him on here at some point soon to do something, so.
Kurt Dupuis:
Sweet.
Steve Seid:
Really, really appreciate everyone listening and we will see you next time.
Kurt Dupuis:
See y'all.
You can find The Whole Truth and subscribe for free on Apple Podcasts, Spotify or your favorite podcast app. We'd love it if you took the time to rate and review the show on Apple Podcasts. It helps others find the show. And for more episodes of The Whole Truth, go to www.touchstoneinvestments.com/thewholetruth. That's touchstoneinvestments.com/thewholetruth, all one word.
Disclosure:
Please note that this content was created as of the specific date indicated and reflects views as of that date. It will be kept solely for historical purposes and opinions may change without notice in reacting to shifting economic, market, business and other conditions. Touchstone Funds are distributed by Touchstone Securities, Inc., a registered broker dealer and member of FINRA and SIPC.
