Insights
We talked with Andre about:
- Leveraging clients pain points to build trust and add value
- Filling in the gaps of clients' financial education to provide unique support
- The importance of a well-rounded financial team to rally around clients
About Andre K. Kwan:
On his journey through real estate and lending, Andre Kwan discovered an interest in advising athletes on how to build wealth and capitalize on financial growth opportunities. This led him to co-found Magna Carta Wealth, a financial advisory firm that educates athletes on legacy planning and maintaining financial security.
Featured Resources
Full Audio Transcript
Lauren (00:02):
All right, Andre, so let's do this. So for those listening, I don't even know how long we have known each other. A long time.
Andre Kwan (00:09):
Yeah. About 10 years or so from the University Club.
Lauren (00:11):
Oh, yeah, I think so. We first met at the University Club years ago, and I know you're on the board there and involved with a number of things but we're going back and forth and we're just always chatting. But you're totally in financial services where we are too. And so I'm excited to hear specifically today about one of the initiatives you're involved with around athletes. I'll let you go into it but before that, if you don't mind just sharing a little bit of your background and what you do on a day-to-day basis.
Andre (00:42):
Sure. My name is Andre Kwan. I'm a co-founder of Magna Carta Wealth. Before that, for the last 20 years, I've been specializing in real estate and finance as well as management. Then just through it all, seeing what was happening on the landscape. I went to Ohio State. I'm a big believer in sports and athletics and kind of the athlete's journey, and as things continue to progress, right? So you have these contracts that are starting to get upward of $500 million and that's great. But what happens to those brand new athletes who are undrafted free agents or just trying to make a roster or even other things we've branched out and seen. An example like women's sports, the disparity in pay and how do we help them as well?
Anyway, Magna Carta Wealth is a consulting firm that basically helps athletes build their financial super teams. What I mean by that, our core focus is trying to match athletes with several different categories. So financial planning, tax planning, real estate lending, and insurance are kind of our core principles of where we try to connect these athletes. And specifically because that's where we saw the biggest need. So when we first started out with Magna Carta Wealth, myself and my co-founder, Stuart Gill, he was an Olympic-level athlete who went on to become an executive for a company by the name of Exos. Exos is a national company and their claim of fame is they train the most NFL-level athletes. So think of college players or whatever else trying to make the NFL.
They train anywhere between 100 to 150 student athletes and maybe about 70 to 80 or so get drafted into the NFL each year. So seeing that, we wanted to be able to create resources because we realized the age demographic for these kids is somewhere between 19 to 22 years old. And a majority of the issues typically happen because their lineage or their parents or their friends don't have that experience when it comes to how do you manage multi-million dollars, let alone just all the different components, whether it's an insurance claim or what's kind of famous for all these athletes now is that when we file taxes, whether it's federal, state, uh federal's easy, right? There's one or two forms you're going to fill out if you own a corporation or not, but on the state side, they can be filing up to 15, 20 returns a year. So that gets kind of out of hand fairly quickly. So that's why we kind of built this system in terms of how to help that. I want to see people, especially athletes, preserve their opportunity, right? How do you build wealth? Because that timeframe for an athlete is much, much different than for a regular professional.
Lauren (03:28):
Okay. So to back up a bit. Talking about athletes here, did you all stumble onto this problem? Was it just from your conversations? What was from your co-founder's experience? I mean, were you seeing your friends who were having these issues? How did you go, okay, there's a real need here and we feel like we can help to solve it?
Andre (03:50):
Sure. Just because we're here in lovely San Diego, I did kind of back into it at first. So being in the real estate and lending industry, we were starting to see more and more athletes like skateboarders and X Games athletes trying to figure out how to buy homes. Their biggest issue when they're trying to use conventional financing is they don't have conventional type of income, right? They might be getting sponsorship deals from companies or skateboard companies. And it may only be, hey, we're gonna pay you for this year but usually for lending, for it to be considered stable income, they're supposed to have three years of income and have a good probability that the income is going to continue. So seeing that is like, okay, cool. We shouldn't eliminate this opportunity to help these specific kinds of clients. So what do we do about it? Part of it is aligning yourself with companies that offer unique programs as well as kind of see the vision, right? Like how do we help a skateboarder who’s on their second deal try to figure out how to buy the home they really want versus you don't qualify at all. So there's a fine line to it all.
Lauren (05:00):
Okay. So out of curiosity, because again, when you think athlete, how are you defining that? You mentioned Olympic-level skateboarders. I'm sure there are pro surfers in San Diego, right? There's NFL players. I mean, I myself am not a huge sports person, so I wonder how you guys are putting a fence around this to be able to define who you're working with? Or is this like a commonality between all athletes you're seeing?
Andre (05:29):
So our specialty and where we focused was mostly the NFL because of that Exos relationship. In addition to that, a lot of those things are kind of already built out, parameters such as there's 1,696 athletes who are in the league each year. And that number is turned over probably somewhere between 30 to 40% each year. We know the beginning contract for an NFL athlete is somewhere around the hundred thousand dollars range. So that's kind of the parameters we typically were working with. And then kind of being able to quickly match those clients with advisors who have specialties in that area. It’s a little bit tougher when it gets to, as an example, I have a really good friend who was a professional tennis player for many, many years but those earnings can go up and down. You see that versus NBA players, who are one of the most unique and one of the best. But the challenge was the quantity, right? There's only typically 12 to 15 players on a team, and the great thing about them, all their contracts are guaranteed, whereas in the NFL, not every contract is guaranteed; a pretty large percentage are unguaranteed or non-guaranteed, if you will.
Lauren (06:47):
And how are you finding these athletes? Because it's not an easy group I'm sure to tap into. Is it like you sort of able to get into work with one, do a great job, and go through word of mouth? Or how are you reaching these audiences?
Andre (07:02):
Yeah, great question. Word of mouth is obviously the easiest component. And then as you've worked with an athlete or the coach, they'll be like, hey, this is how I got it done so then they'll do it that way. And then on top of that too, my co-founder lives in LA and I forgot who said it, but you know every athlete wants to be an entertainer and every entertainer wants to be an athlete. So there's a cross-section in there in terms of what we were able to come up with. And on top of that, we try to make it very purposeful, right? We want to have our marketing speak directly to what those athletes are going through. Like what we just mentioned. How in the world if you've never filed a tax return or your parents have never filed 15 tax returns, are you going to be able to do that?
Having the steps to walk them through was kind of a big belief for us, right? Like understanding their challenges, listening to them. But more than anything, I think, Lauren, to answer your question, it's building trust, right? Most of these athletes don't have a support system that has come from that kind of financial literacy or background or lineage. So trying to build that trust is really where it all starts, right? We're happy to give away as many strategies or different experiences or results that we've come up with. And the thing is, in our field, in the majority of the fields I listed, you have to be licensed to be able to do it. So you could want to write your own mortgage, you could want to do your own financial plan, and you could try to do all those things but usually you have to work with licensed professionals. So a little bit of all those components.
Lauren (08:35):
To be able to get that advice as well. So then, with that being said, when you're working with athletes, is it usually when they're in the heat of their career or is it post-career? Where do you typically kind of support them in that journey?
Andre (08:51):
So typically we're trying to work on the front end as much as possible, right? What we've found is that the landscape continues to change. For example, one of the big rulings that has changed the entire sports world was the ruling for NIL, which is name, image, and likeness. Basically a couple years back, the NCAA started to allow these athletes to kind of generate compensation based on their name, image, and likeness, which was never, ever an opportunity before. As an example, you have these athletes who are signing up to schools who have never played a down at all making millions of dollars before they ever step on the field. So imagine when you were 17 or 18 years old, if you came up with a $500,000 contract with a car company to advertise their car.
What would you do? How would you spend that money? I'm sure I would've made a lot of mistakes had I got a $500,000 check when I was 17 or 18. And on top of that too, it's not really $500,000 after you take out all the taxes and everything else. I could have spent $500,000 and been in the hole. So just trying to learn these little things and then share, that's the best way we're able to approach this kind of challenge and solution.
Lauren (10:10):
Yeah. So interesting. And then to help them prepare for that, do you guys do educational workshops or is it one-on-one sessions, or how are you helping to kind of coach these athletes as they're getting ready for a post-athletic career?
Andre (10:26):
So we have done some in-person meetings. Typically when these athletes are training, we are trying to catch them as part of the training session. Obviously they're working on their physical component; as an NFL athlete you're working on how fast you can run, how much you can, bench press or squat or jump or whatever else. But as they were eating, we'd cater lunch and be like, hey, these are things to consider when you went to school at USC and all of a sudden you got drafted by Cleveland. Here's what you need to know going into that kind of opportunity as well as a new city and how do you kind of build from there.
Lauren (11:05):
And then you're able to support them, I'm sure. But I'm assuming you also have a pool of partners who specialize in working with athletes. Is that true? Or how do you make sure you're able to be that support system for them when they go, well, I need this and I've got someone you can refer them out to the appropriate person that gets them and where they're at.
Andre (11:25):
Yeah, that's correct. So usually what we think is Magna Carta is kind of like the quarterback, if you will, for the situation and we're trying to plug and play because a lot of these athletes are working with an agent, they might already have a financial advisor. They might already have one or two of the professions in there. We're trying to take an assessment to figure out who they have and what is missing, and then go about trying to connect them. Because some of the licensing is state-specific as an example, right? You might work with a real estate agent here in San Diego, unfortunately we don't have the Chargers here anymore, but let's just say you know somebody went to Boise State, they got drafted by the LA Chargers, and they have nobody they know in LA so how do we work with geographic-specific professionals to help them out?
Lauren (12:12):
Yep. That makes sense. That are specific to their needs and where they're at. Okay. Out of curiosity, are there any athletes you feel are model examples for how to manage where they're at and their financial journey?
Andre (12:27):
What a great question. I think two that really just pop off our list, and because they're kind of different, but Rob Gronkowski as well as Marshawn Lynch. The reason why those two kind of jump off is because they were able to make their living strictly off endorsement deals, and they saved every penny of their NFL contracts. So because of that saving, and hopefully if they work with the right team, they're able to invest and have that money compounding year over year. And those guys played a significant amount of time. If they're doing the right moves and they're conservative, living off interest or some other things, they're set for life and more importantly, their families and legacies are set for life after that.
Lauren (13:09):
Okay. Very good. Thank you for sharing this too. Well this is great. Anything else you want to add that you think would be helpful to share?
Andre (13:18):
Yeah, I think regardless if you're an athlete or not, we always are talking about how do you build the right team around you, right? Even when we're working with regular employees or founders of companies or self-employed people, they might have a great CPA but they don't have any financial plan. They might have a family member who’s a financial planner but they're doing their taxes wrong. They're going out and maybe buying a piece of real estate that is way over their head or they're just on a spending spree. So anyway, I say all that to say I believe in building a financial team that's well-rounded and communicating with each other because that's the biggest component, right? You could have five different professionals with five different kinds of plans and programs, and if they don't jive, something's got to give.
Going through an audit every single year, nobody likes the word audit or anything else, but it really helps if you're trying to get the best credit, the best loan programs, the best insurance rates—really having a sense of what's the income, what's the expenses, and organizing your financials, meaning what's in the bank, and on top of that too, the tax returns and everything else. I'll share a funny, funny story. Just a 10-second story. We're helping a coach who was buying a multimillion dollar home and his deposit, I want to say was $250,000. And typically when we do regular financing programs, you have to have the last two years’ tax returns filed and ready to go. Why this was crazy was because when he applied, he got his offer accepted, everybody's happy, then hey, let's go get your financials, let's get this all ready. He didn't file his last two years’ tax returns.
Lauren (15:05):
Oh my gosh.
Andre (15:07):
That deposit of $200,000-plus was on the line. So you never want to be in that situation. That's why it's super important to be able to have everything organized and have your team in kind of a flow status or flow state. For most people, their real estate and their loan is typically 99% of the time their largest financial asset as well as liability. So we just want to make sure you do those things right. You know, you only typically have one or two chances at this.
Lauren (15:38):
Yeah. That's so fair. That's right. Very good. Well, this is so helpful. I appreciate your insights. It's really fun to hear more about this venture you're involved with too. And then also just the athlete side of it too because everyone isn't working with that audience on a day-to-day. I know there's a number of companies that are investing in this audience. We work with a lot of clients where they've got a target market but it's not always as refined. And so to be able to hear more of who you're helping, how you're specifically helping them, how you're reaching them, and what those problems are, I think is really valuable. Again, especially since it's an audience that you're not going to run into every day. So it's fun to hear more about that for sure. Thank you again.
Andre (16:20):
Of course. This was fun, Lauren. I really appreciate it. Thank you for having us on and definitely you guys are doing great things for your company and the community as well too. So whatever we can do to support, please let us know. But thank you so much. This was enjoyable.
Lauren (16:32):
Thanks. We appreciate it.
Andre (16:34):
Okay. Thank you so much.
Alleviating Client Pain Points Through Proactive Education
We’re excited to announce that Olivia Tobolewski has moved into the role of marketing implementation specialist on the Out & About team! Her amazing energy and can-do spirit supports the ongoing success of our clients.
In her new role, Olivia will work on a variety of projects to support marketing strategies using data, analytics, and technology and continue helping clients tell their brand story through visual layouts and digital graphics. She will use her extensive experience and deep skill set to support and improve future campaigns, websites, and so much more.
We’re thrilled to have Olivia on the team and look forward to watching her continue to shine bright. Congratulations, Olivia!
Announcing Olivia’s New Role
We talked with Gail about:
- "Sending the elevator down" to help lift up the next generation
- How our mental health affects how or if we invest
- Why everyone needs a board of directors for their lives
About Gail Perry-Mason:
Gail Perry-Mason’s prowess as the senior director of investments at Oppenheimer is just a fraction of the deep investment she makes in her community. Inspired by her own journey, Gail’s true passion includes investing in today’s youth and cultivating a community around them to elevate their financial footing. Through exposure and development, Gail teaches young people how to make money work for them. She shares tips about time management and finding a work-life balance that may inspire others to start making moves toward their next big dream.
Featured Resources
Full Audio Transcript
Lauren Hong:
All right. Well, Gail, I am so excited to have you on the show today. I was just reviewing just your background and resume and it's so extensive and impressive. Your career went from receptionist to senior director—talk about hustling—and then you have been a speaker for government agencies, religious groups, nonprofits, youth organizations, universities, and the list goes on and on. And then you have this really rich experience working with the youth investment club. And then Money Matters for financial literacy. And I'm so excited to dive into that. I mean, not only for the work and the knowledge you have within your day-to-day, but then you've been able to really cultivate a unique voice for youth and for families around financial literacy. So I'd love to just start there and let's maybe start with a little bit of your background and your story and then we can get a little bit more into the financial literacy side and how you've really been able to create a voice and show your passion through that. But I'll turn it over to you. Let's hear a little bit more about your background.
Gail Perry-Mason:
Thank you for this opportunity and thank you for just being so awesome and just letting me tell my story and letting others tell their story. We need people like you in the financial service industry who do podcasts and tell our story because everybody looks at the financial industry and thinks they're just stuffy and this and that. No, you give a voice to everyone. So I thank you from my heart to your heart that we are doing this. So anyway, I started out, and I don't know if you want me to bring this up, but I was adopted in Detroit and all this stuff, foster care, missed growing up, and got adopted by an older family that never knew anything about the financial industry.
They just said, Gail, have a joint account with Jesus at the credit union that only you and Jesus know about. And I was like, okay, that's all I knew. It was just to have an account at the credit union. I grew up in a strict household but then I went away to college and I ended up having a child in my second year of college. So I was broke of course like most people. And then I ended up having to send my resume out everywhere and I was like, oh my God. I sent my resume out and a brokerage firm called me and I was like, oh wait a minute, <laugh> this is divine order: I'm broke—brokerage firm. I had no clue about the stock market at all.
So I didn't even know what a brokerage firm did. But anyway, I became a receptionist and as you can already tell, I love to talk to people and meet people. So I was a receptionist and everybody was coming in the front door. Nobody looked like me. And what I mean by look like me, the gender was all males. This was in the ‘80s, all males and nobody was African-American. So I was like, oh wait a minute. And it was gnarly. So one time this woman came in and was just so nice to me. She had just got divorced and I got divorced also. And I was like, wait a minute, you got divorced.
I'm thinking, okay. And she says, well, why are you here? She said I'm coming to invest my money from my divorce settlement. And I’m thinking the only thing I got from my divorce settlement, matter of fact, was overdraft protection on my line of credit. Yeah. So I got nothing; I had no settlement at all. Just goodbye. So anyway, so says I'm gonna have a million dollars. I'm thinking you got a million dollars. Like, well basically who did you marry? But anyway, that's a whole other story. So I said, wait, what are you gonna do with this money? I need to talk to you. I need to know what are you gonna do? She had small children. I said, how are you gonna make it? What are you gonna do?
She said, I don't wanna work. I wanna raise my children and I'm gonna live off the dividends. And I'm thinking, okay, I'm gonna learn everything that's going on. So I always say success leaves clues. So I look at what she was doing and living off the dividends. So that's why I became a secretary. I said can I get promoted to a secretary please? And they allowed me to do that. And then actually going to people's accounting, okay, dividends, you're doing this, you're investing. I'm like, I have to teach people, this is how life is supposed to be. We're supposed to work for our money and money is just a tool and then we make it work for us. So I say, oh, let me figure out how to do this and how I'm gonna teach people. The only way I'm gonna do that is to get a license.
So I asked them, could I get licensed? And they were like, yo, no, no, no, no, no, you cannot get licensed. Actually what was told to me, this was back in the ‘80s, you're African-American or you're Black and you're a single mom; the answer is no. You cannot become an investment advisor. Well I worked for some rookies, that's what they called 'em back in the day. And I worked for some other established investment advisors. So I was the secretary for them or sales assistant. So one of 'em left their books on the table one day. Lauren, lemme tell you what I did. There was a copy machine; I picked up my son from daycare, came back to the office, and Xeroxed the Series 7 study guide. I studied every morning. Oh wow. And it was a sales assistant who sat next to me because nobody would actually allow me to do it.
So the sales assistant—this is why women stick together—she and her husband paid for me to take the test. So anyway, I ended up getting sponsored; my job said they'll never pay for me, never send me to training. Anyway, so fast forward, I took the test, passed the test, and then they took bets. I'll never pass it, but I became a licensed secretary. But I started putting on seminars when I was a licensed secretary after hours. And I called a guy named John Rogers from Aerial Capital and everybody knows who he is. Him and Melody Hobson called them to Detroit and said, hey, come on the seminar with me. And Melody was an intern at the time. So fast forward, I ended up opening up over 100 accounts at night, people investing and all.
So I ended up coming in saying, hey, I got 100 accounts. They said okay but we don't want these little accounts. And I'm thinking, I just start crying. And they said but you know what? You can try to be a broker. We're gonna give you 90 days. If you don't make it as an investment advisor and hit these numbers, we want you to slide back over to another chair with wheels on it <laugh> and just go back to being secretary. Well anyway, I just slid over and just started teaching people and that's why I do what I do, Lauren. And that's when I became an investment advisor. So I would never change anything, any obstacle or any way in my path. But when I have changed, I wanna change for other people. And that's why I do what I do, Lauren, I send the elevator back down to the next generation.
I don't want anyone to say no and deny people the opportunity I was denied. Even though I still made it in the industry, it was a different track that I was on. But I want people to actually have the training, be invited in to become an investment advisor and to teach people. So if I have a seat at the table, turning 60 this year, I look back and say, wow, I have 60 women who I have mentored who are now in the investment industry. Whether they're women and several African-Americans—over 20—who are in the investment industry. And the thing is to send the elevator back down and then they rise higher than me, which means they're doing better than I am in the industry. That is the reason why I'm here. And that is why I love and what brings me joy is that once a seed was planted, I learned we have to reach back and we have to teach others. We have to let them have a seat at the table with us. And that's why I love what I do. And that's why now I start with teaching children and our youth.
Lauren:
Oh my gosh. Incredible.
Gail:
That's what I do Lauren. And that's my backstory.
Lauren:
That’s a great story—how you found your way to where you are but then have been able to, like you said, bring up the next generation. I'd love to hear more about that. So is that mostly through the Money Matters program or for the youth initiatives you're involved with? Tell me more about what that consulting looks like and really what that mentorship looks like.
Gail:
Yeah, one day I was reading the Wall Street Journal and this was in 1996. Because I always read about successful people. I always say success leaves clues and we have to case out the situation, which means copy and steal everything <laugh>. I started casing early. So I ended up watching how somebody did a rich kids camp but in this rich kids camp you had to have so many millions in assets, which mostly the African-American community did not have at that time back in the ‘80s and ‘90s. And so I said, wait a minute, I gotta figure this out. How am I gonna do this in Detroit? So I did this: they had to bring $50 and have $10,000 in assets to send your kid there. Then your child had to have $10,000 to invest. I said, I'm gonna do it here in Detroit and I'm gonna make this work.
So of course I put up my own money and I haven't had a vacation since 1996. I take off a week every year and I take a few hundred youth, I call them young investors. I divide 'em up like small cap, mid-cap, and large cap; small cap is elementary school, mid-cap is middle school, high school is large cap. And they graduate each year. So as they get older in different schools I ended up having them learn everything about how to invest. But the first thing I teach 'em is don't ever love anything. They can't love you back; money cannot love you back. But we teach them how to make money work for them. And I actually give them a pillowcase. And they actually write on the pillowcase how their money is gonna work for them while they're sleeping.
So they have to actually do their vision board on a pillowcase or I have this one plate they have to write on. How are they gonna serve the world and make money also? So we have all these analogies so it's mostly an experience. So what I do is give our young people the experience of going to meet Warren Buffett, going to the Berkshire shareholders' meeting. So I take them actually to learn to vote. So they learn if you own stock you can vote. So I have young people who own Berkshire, who own all these companies, who actually go to the shareholders' meetings and then they have to set up their own personal board of directors, whether it's somebody who mentors, an accountant, a banker, a credit union, whatever you wanna call it.
But then also in the last few years because of COVID, I incorporated mental health into everything. So I'm not talking about stocks individually but my kids will take stocks where DoorDash versus Uber Eats cause they eat out all the time. I can't believe these kids. So they do tug of war the very first day. So large cap versus mid-cap or mid-cap versus whatever. So they actually learn the strategy of the market and the strategy of when to hold on, when to let go, do your research, talk about your strategy, how you're gonna hold on or how you're gonna let go and not get burnt. But also when I incorporated mental health it comes to the same thing with anxiety, with depression, with hate, with forgiveness, you've gotta know when to hold on and let go.
So I actually have change agents because everybody needs a change agent on their board. And that's actually to talk about mental health. So I have a lot of psychologists come out to talk, since a lot of reasons we don't invest is because of self-esteem, not knowing different things. And with my camp too, a lot of the young people, some come from affluent families and some come from foster care or some come from inner city Detroit who've never even gone outside the city limits. So I end up taking everybody and they all learn how to spell the word opportunity. And the word opportunity is the word unity. All of these young people come together and start their own business, set up their own personal board of directors. And we don't have enough time to talk about the success stories about them starting their own business.
And now one young man, you're talking about 60 something million later, has his own staff in LA. I mean just the businesses that they have started. Even now we have a lot of young people who have clothing lines and everything, or they're in the financial services industry and they have their own venture capital funds. Now they're doing everything. I mean, I'm like, look at these kids having their own hedge fund and they actually start their own portfolio in the money camp. I say our youth are like Kodak film—they need exposure and development. We have to expose them to the world of finance. That's the main thing. And then we have to not only expose them—we can't just turn the TV on and expose them—we have to develop them with experience.
For our young people, hands-on experience is everything. But the main thing we teach them too is gratitude. Once you learn something, you always write people letters. Like I do, I do gratitude notes. I do 10 a day. I will write John Richards or Melody Hopson, Warren Buffet or whoever or you know, the CEO of Ellevest, Sally, all of them. I write them a letter and just say, I'm proud of you. I don't ask them for anything. I just want people to know I'm proud of them. So the power of the pen is still so important. So they end each day writing a gratitude note to someone. So we teach 'em everything—how to sit at the table, for men how to hold the chair for a lady, and what fork to use, what knife to use. Because we have a board meeting on the last day.
So it's from A to Z, whether it's fencing, lessons on how to stand up straight or it's how to sit down and how to eat pizza with a knife and a fork and what knife to use, what fork to use. So we teach them everything and how to start a business and how to budget is so important too. So I know I'm talking a lot Lauren, but I'm loving it. You probably have another question. That's my money camp. And it's my passion and Lauren, you know, for a living, as you already know, I work in the investment industry, but for life I invest in others and that brings me the biggest dividends and the biggest joy. I may not have the big portfolios like probably a lot of people listening to this podcast, but my portfolio of youth, oh it's tremendous. And their dividends are they will live on forever. That is what I want basically as my building wealth legacy.
Lauren:
Amazing. I feel like there's a lot of people in this space and they wanna be able to give back and do the kinds of things you're doing but you found a space for it and you've made time for it. And how have you gone about doing that while managing to climb the ladders with your day-to-day as well? What was it? Have you been doing this at night, on the weekends? How have you been so successful in both realms? Both from a passion side plus having a family and all these other aspects of life?
Gail:
Well, Lauren, I will say, and I know you know it's difficult having a family and trying to balance it. When my kids were younger, every one of them had to go through the money camp. Every single one of them had to work the money camp. And they're still, to this day, they'll take their vacation and come back and help me along with about 50 others. They will take their vacation time. So normally I never take a day off is one thing. I work seven days a week. My clients become my friends, they're my friends and my family and they actually come and help me teach the kids, whether they're business owners or whatever they come. So I use an all-inclusive, holistic approach to my strategy of balancing life where I include everybody. It’s like, hey, you like kids, you wanna give back, come on and help me.
Help me with this passion, this mission. And then even a lot of my clients want to send their kids to the camp. So everybody gets involved. So it's kind of like all around a wraparound but balancing it, lemme tell you about balancing it, I have to start every single day. I literally start every single day on my knees because it is a strategy to do the right thing for my clients and have time for them, and then I have to write down, matter of fact, you probably see this right behind me right now. Okay, I gotta call this person, I gotta do this, gotta do this. And I do that every single morning.
And then I try to balance and I take an hour out of each day, okay, let me follow up on money camp. This is what I'll give to money camp, give the rest to that. And then leading up to it I'll take a few days off and try to get it all organized. So I now have my own board of directors I've made up to say, hey, hey, I need help with this. I need help. And I think everybody, even our clients, I tell my clients to have their own personal board of directors that we can call on people because you need that life coach. You need that mental health coach. You need that physical coach, that somebody who helps you to stay healthy. And then I also have a meeting with my sons. I call them sunshine Sundays, and say, hey, okay, what can you do this year?
How can you help me with the money camp? You know, what can you do? And it becomes a family affair. And what I mean by family affair, I have so many young people I call my sons and daughters and they all come over on Sundays too, and we work together. I love cooking. So I cook for everyone and then I end up, okay, let's do this, let's get this together. So it is difficult to balance sometimes but I do my best to balance and I keep a calendar and I just try to do what I can for everyone. And that's when it comes down to speaking and everything else too, Lauren. It's difficult but it can be done.
Lauren:
I mean, it sounds like it truly takes a village. It sounds like you've been able to cultivate your community, both at work, personal, et cetera, to be able to pull everyone together. And then over time, how have you really been able to amplify the voice and the value here? It's like identifying the youth and creating those opportunities. People are aware of this program, this opportunity. What have you done to be able to plant those seeds and pull that together?
Gail:
So what I've done absolutely is I plant seeds in different neighborhoods in Detroit with the youth. We actually go to different neighborhoods; this is how we cultivate families to really bring change. We plant a financial garden and we lead kindness rocks all throughout the year. Oh wow. So this is what I do. So many. Yes. So we planted gardens at homeless shelters everywhere. It's just so amazing. I love to plant a financial garden and have the youth go over and water it because to have anything you have to pour into it.
I do have a village that actually plants a garden, that actually gives back and helps me. And so that's the number one thing we all do together. But the way I find my children, I will go and speak at different high schools in the city of Detroit or outside of the city of Detroit. I will also go to foster care homes. I also sleep outside with the homeless once a year. And I find a lot of homeless youth and they need this. And my one major success story I found when she was 16, she was sleeping in her car, her name is Courtney. And she was sleeping in her car. She thinks of me as her god mom. I call her my daughter and I followed her all the way through college.
And when Courtney was sleeping in a car, I said, hey, I got you. I'm gonna make sure I work with the organization called National Association of Securities Professionals. We give scholarships every year. I said, I'll make sure you get a scholarship every year. I work with them and chair the scholarship bond and all of that. So I said, hey, we wanna make sure our youth can go to college because sometimes they just need the opportunity. I wanna make sure they're not poor. Poor means passed over opportunity repeatedly. She was in the system, foster care, she was passed over once we got her the resources she needed. She went to Harvard, she went to Eastern Michigan. She has her own organization called the Phoenix Center. She gives back, she's a Rockefeller. She gets money from the Rockefeller Foundation.
I mean, you name it, she's killing it. Courtney's just doing great. I'm so proud of her. So I will find them; I don't care whether they have a home. And the thing is, when I was born, this is why I do this, and I'll tell you this, Lauren, when I was born and I was left at the hospital, I was labeled special needs. They said I'll never be able to walk, never be able to talk my entire life. Because my mother just walked away and left me at the hospital. So I was just a ward of the state. So they labeled me. And then one time this doctor came over when I was adopted at the age of four, and said, you know what? She's not walking, she's not talking. You know what, hold her, hug her, and love her.
Give her love. So this 80-year-old woman loved me. She was in her 80s, and she said I'll take that responsibility. And she loved me and I never shut up Lauren. But the thing is, I needed love. So when people label our young people as, oh, they're homeless, they're this, they're that. No, I think love heals. And that's what everybody in my money camp will tell you. I always tell 'em, love means obstacles vanished effortlessly. And we have to get over these obstacles because the only way we're gonna do it is love. But of course everybody says, okay, how many assets under management do you have? My thing is, how many young people, those are my assets under management, those are the greatest assets I could ever have in my entire life. And they're under my management and they're bigger than the assets I have where I work. And that's what really matters. Oh my gosh. So, and wait, Lauren, I'm getting emotional.
Lauren:
I can feel it on this side too. It's such a beautiful story and I'm so thankful for the opportunity to be able to hear it, despite geography, distance or anything like that. I mean, you can feel the impact of what you've done and also just how it's come together and touched so many people's lives. And also just like the legacy of that. I mean, it's not just seeds we've planted yesterday or a year ago but years ago, all that time and effort and cultivating to where it is today to these kinds of stories is just amazing. I'm sure so many people look to you and are so amazed.
It's absolutely beautiful what you've been able to do. And I'm, like I said, grateful to hear it firsthand. So I know I want to make sure to include resources for those who want to get involved but are there any other thoughts you would share to anyone who wants to be able to get involved or be able to give back to our youth or our community? And like just first steps of where would you start, because it can be an undertaking and then also cultivating all the resources and energy but what would be advice to someone who wants to get involved?
Gail:
You know, try your local Junior Achievement. We partner with Junior Achievement and they have a stock market contest and of course my children always win, my young investors. But even if you just mentor one person, and I'll encourage everyone in the financial services industry, the lending business, the banking business, whatever, bank on our youth, lend them your time. Invest in them no matter what job title you have. I just think we're more than our job title. Our job title is a servant leader. If we made it to the C-suite, that means we need to have compassion and caring. And that C-suite, we need more of that. So if you made it to that suite, it's time to bring others in that suite with you and give them a seat at the table.
And then don't look down; the only time we should look down on somebody is when we're helping somebody up. That's the only time. And I think we just can't look down on others. That is just my biggest thing. I think it'll make the world a better place. And the financial services industry, it's the center of our world, but we can bring so much change in this industry. And that's what we're doing this year. We're doing this sport of investing. So I'm adding sports into it. So this year we're doing financial football, everything. Ballers and basketball, we're doing it all.
Lauren:
Oh my gosh. So amazing. I know, and like you were saying earlier, you're going to send that elevator back down again, right, to bring people up. So yes, I just appreciate all the work you've done, appreciate you sharing your story, and it's so impressive. I've got goosebumps.
Gail:
It’s really beautiful and I have tears. I'm like, oh my God, I talk about my babies. Like I said, I don't have enough time to talk about all the stories, but they're more than amazing. All my young investors. So I just want them to leave the door open for them and send the elevator back down. So thank you, Lauren, for this opportunity and thank you for everything you're doing. We all need you on our board of directors; what we need is a Lauren. Thank you.
Lauren:
We all need each other. Like you said, it takes a village. And thank you again for all the work you're doing.
The Evolution of Chasing a Passion
We are excited to announce that Karen Villata has moved into the role of Senior Project Manager, a testament to her dedication to the team and our clients.
Karen’s commitment to caring for relationships and building systems that help us deliver better and more efficient outcomes has proven invaluable.
In her new role, Karen will continue that commitment through mentorship and training of new employees as well as active and ongoing support for the brand coordinator team and client-facing communications.
We’re excited to see Karen thrive in her new position. Congratulations, Karen!
Announcing Karen’s New Role
We talked with Eliza about:
- Human capital challenges surrounding internal growth, redeveloping recruitment practices, and the impact M&A activity has on the firm as a whole
- How strong leadership engagement and detailed implementation schedules are required for strategic initiatives to truly take flight
- Addressing compensation and cost of living adjustments amidst high inflation and decreased revenue as firms move into 2023
About Eliza De Pardo:
Founder and director of De Pardo Consulting, Eliza De Pardo brings a wealth of research-backed insights on the talent shortages and growth challenges faced by financial services firms as they move from 2022 into 2023. With her expertise in human capital management, Eliza educates as well as aids firms in developing strategic implementation practices that coalesce around a growth strategy.
Featured Resources
Full Audio Transcript
Lauren Hong: All right. Well, Eliza, thank you so much for joining us today. I was reviewing your LinkedIn like I was sharing just before the call, and so impressed with your background having worked at TD Ameritrade and then also Moss Adams and holding a number of consulting roles. And then now you've consulted with hundreds of financial advisors and continuing to choose firms I should really say. So I'd love to hear how you got started in your consulting practice and launching it independent of working with some really big names.
Eliza De Pardo: Thanks Lauren. Thanks for having me along. I always describe it as a very long path to get to this point but I think there probably are defining moments in anyone's career you can point to that kind of got you where you are today in terms of founding a firm. But my career in consulting in the US really started with Moss Adams back in 2006, around that time I was recruited and moved to Seattle from Western Australia and worked alongside Mark Diversion, which was a fantastic experience. That team was wonderful to work with. And then the financial crisis hit me. Many people know Moss Adams kind of closed up their consulting group at that time. And I co-founded FA Insight with Dan Invi, which was a research and consulting firm that exclusively served the US financial services industry. And Dan and I produced a wealth of research together and consulted with institutions as well as larger advisory firms. And we had a great run for many years. And then were acquired by TD Ameritrade back in 2016, who was actually our biggest client at the time. And actually we stayed on with TD Ameritrade. Dan and I both did a lot of work with them, building more research, producing their practice management programs, white papers guide, all sorts of tools for advisors. So it wasn't until the Schwab acquisition of TD that I decided to go out on my own to consult and work independently.
Lauren: Fantastic.
Eliza: Kinda a long path.
Lauren: Yes, with such great experience and connections and all of that. So consulting can go so many different directions, from business strategy to practice management, a variety of things. And for your firm, what are you really focused on or what are themes that come out of your consulting work and talking with different firms?
Eliza: Well, at the moment I would say the majority of the consulting work in particular is focused on human capital management. We have an area of expertise here. We've done that for many years, but there are so many factors in the marketplace that are creating human capital challenges for advisory firms at the moment so that tends to be where we're engaged. Areas like organizational design, compensation planning, performance management, and all the human capital issues kind of associated with those buckets, if you like, where folks need help generally. And then we do a lot of work in strategic and really supporting firms, larger firms in understanding, coming together around a growth strategy and being able to execute on that strategy. So that's from a consulting perspective and from a research perspective, we like to really cover all areas in the market. And I've found that over my career in consulting the more depth of data you can have available to you to consult, the better that is. And the more consulting experience you have to feed into the research, the better that is for the research. So those two elements are really important to work together. But generally I would say human capital is probably the one area that really films the most challenged right now.
Lauren: Yes. Can you share a little bit more about that? I mean, it's sort of an interesting time, right? I feel like I've seen a lot of firms that are going through M&A activity or they're trying to hire and find that right culture fit or the right growth structure. What sort of obstacles are you seeing with firms as they are trying to grow or is it just a sort of like a boon of growth? What patterns are you seeing?
Eliza: Well, this year in particular has been a rough year for advisory firms. The markets have been very uncooperative for the typical firm, and I think most firms are gonna be down in terms of revenue this year. But in addition to that, the acute talent shortage now in the industry is probably one of the most significant challenges for firms in terms of being able to sustain rates of growth, which you could imagine the sort of disruption it causes in a business. When you lose somebody, a talented team member who leaves the business, that becomes harder to replace. It might take you six months or longer to find the right fit to replace that individual. And you've got this kind of gaping hole in the firm for a period of time. And if you experience more than one departure, and it's kind of common at the moment, many firms are sort of struggling a little bit with the retention of talent. This will over time make it harder and harder to sustain rates of growth. And certainly if you're losing talent in the area of business development, client acquisition, of course the impact is felt even more significantly. So the acute talent shortage is a challenge. If we combine that with economy-wide impacts, like very low unemployment right now, very high inflation, all of these things are combining, including what we experienced last year, which was this concept of the Great Resignation back in August, which kind of hit its peak. All of these things are combining to make it extra difficult for firms to grow their pool of talent in a really sustainable way. So I think firms have to be really focused on how they're going to develop talent internally and perhaps change their approach to recruitment to perhaps have more luck in terms of getting the right people into the business.
Lauren: Yeah, we see it too. I mean, it's like you said, the Great Resignation, right? Which is a nationwide trend that's happening. But I feel like in this industry, regardless, it's really hard to hire; the right value set and the importance of the hire is so critical, right? Cuz it's that client relationship and then holding onto that client relationship for quite some time. It's a relationship-first business, right? So it's not just, okay, check, check, check, have you got this credential but also is there a value set there, and a reflection of how the firm is looking to present themselves outwardly.
Eliza: Yeah, that's very true and I think firms are extra cautious whenever they're recruiting roles that will be really close to the client relationships. They do have to meet firm cultural values. They have to be really in alignment with the way the partners are running the firm to be a good fit for clients and for the business. So it takes a little bit more effort to try and figure that out when you're recruiting, but I think it's worthwhile taking a little extra time to make sure those decisions are on point, because of course any errors made can be kind of just ongoing, and you don't want that ongoing turnover of talent as we make recruitment missteps if you like. And oftentimes, as you know, I've met firms over the years where their retention of talent has been a real problem. Oftentimes it comes back to their recruitment efforts and how well or not so well they're going through the recruitment process. In some cases they're finding they're getting higher rates of turnover because they're not doing such a good job upfront.
Lauren: That's fair. So I have to ask you this—it has been a weird year, right? With the markets and coming off of COVID and all of those sorts of things. And as we're going into the new year, if you were to give one piece of advice, especially to C-suite ownership about the look ahead around human capital management, what would be that nugget of advice you would give them that you feel like would set them ahead?
Eliza: I think as it relates to the growth of talent, I think you've got to invest heavily in your own development pipeline if you like. So creating a career path, showing talent what the future could look like for them in the business, but then investing really heavily in the development of talent, whether that's internal training, role shadowing, mentoring or engaging external trainers to be able to support the development of your staff. I think it's incredibly important given how hard it is to recruit, given how hard it is to retain talent. I do think firms really have to focus heavily on building development programs. But related to that, we're going into performance review time for the end of the year for 2022, and many firm owners and executives are gonna start having conversations around compensation. And I do think that being extra prepared this year for what will be challenging conversations around pay is important if you want to make sure team members feel valued and we're not rocking the boat and there are no surprises, nasty surprises, for anybody. I think you've gotta be extra prepared for your compensation conversations this year.
Lauren: Yep. That's absolutely fair. And that's actually really good advice because you're right, it's a very competitive market right now and it's easy to be able to have shiny objects with big numbers, but doesn't necessarily mean it's the right culture fit too. So that's great advice. So just learning a little bit more about kind of the ethos you're leading with too, it sounds like there's a lot around positive change but how do you handle that when things aren't so positive or are there things that you try to really lead forward with so when you come into working with a firm that might be an X state, how do you get them sort of to that next state so it's leading versus just cyclical?
Eliza: Yeah, I think whenever a firm engages any external consultant to come in and help solve challenges, you have to be really honest with them about the kind of effort it takes to be able to drive change in a firm. The firms I've worked with over the years that have really excelled in the implementation of change are those businesses that have really strong leadership who take a very keen interest in the initiatives you're working on. And they do a really great job of communicating regularly with the team. They also have the capacity to be able to do the work that's required to implement the change. So for example, if you undergo a piece of business in trying to transform parts of the business, you don't really have the capacity to manage that actively every week, week on week. And it could be easily an 18-month change program, if you like. In some cases you're simply not gonna make any headway, right? So I really encourage firms to understand the effort that's required to drive the change consistently, making sure they have capacity, making sure they're assigning the right skills to the projects, and they've really also got the appetite and the enthusiasm for it. That goes an awful long way. Yeah, that's definitely, when I look back at those clients who do really, really well in implementing change, they tend to have executives who have the capabilities and who really have the enthusiasm for the work.
Lauren: That makes sense. It's interesting to hear you frame it that way. So from a marketing perspective, we're always mapping the marketing directly to the business strategy, right? Where do we wanna go? And then how are we gonna map that in? But it's really easy to kind of, I think especially for C-suite, right? They can see the vision and it's easy to talk about the vision and wanting it now, but then how do you layer that in so that the change is managed appropriately? And I'd just be curious when you're going into an engagement, because I'm sure there's an umbrella of activity. Are you then timelining that and basically project planning those various initiatives based off of where the firm is at, kind of what does that look like so you can work toward that positive direction of what the outcome is and have clear expectations going into it? That it's not just gonna be sort of snap your fingers and it's all flowers and butterflies.
Eliza: Well, oftentimes that's how strategic planning feels—you go through that process, it's creative, the management and executives love to be involved in it because it opens a door to some great discussion and they're generally pretty excited about where they land in terms of designing the strategy, which is wonderful, but it can wear off unless you gotta keep the momentum going, right? So we do work with the firms in the implementation planning and for some clients, not all, it depends on the firm and their needs, but we will develop what we call a very detailed implementation schedule, which takes, for example, the firm's strategy for the next 12 months and breaks it down into very detailed actions and we assign accountabilities and we set timeframes and then we'll manage that for a 12-month period, in some cases up to two years, to try to ensure that all the project teams within the firm are staying on track and the working groups are getting their stuff done. And we meet on a regular basis to make sure that's happening and provide coaching in the development of solutions along the way. Some firms, however, feel quite equipped to do that themselves, which is great. Others prefer to have more guidance in that area. So it's kind of a mixed bag in terms of how we work with clients to support implementation.
Lauren: Yep.
Eliza: Does that answer your question, Lauren?
Lauren: Yeah, it does. And I mean, I can feel it on this end too because it's not at the company-wide sort of operations level, right? But for us, I mean, if we're, for example, rolling out a new positioning or branding or what have you, it's a culture shift and that does not happen overnight. You can put something up, kind of like if you were to put up a website, but if no one knows about it; it takes time to build that up. If you put out a new brand, people have to know about it for it really to take flight. And that takes adjustments and it doesn't happen over time. And I'm sure it's similar to your work and we're just a little bit of a smaller degree cuz marketing sits underneath business strategy.
Eliza: You're spot on. It's that communication piece that's so essential. If you've got leaders in the business that are communicating openly, regularly, with the broader team, you're much more likely to be successful in implementing the change. If no one knows about it and it's all happening among a small group of people, then we expect change to happen, it's just kind of unrealistic.
Lauren: It is. And having the leadership believe in the change and then to have those internal champions to help drive it. So I'd love to hear too, since you've had access to the C-suite at so many different levels, I'm sure of a variety of sizes of firms and what's going on. Is there anything in particular at where we are and in the world right now or what you see ahead that just gets you fired up that feels different or feels like it's a disruption or a trend or what have you, that I think is an exciting potential change for this industry too?
Eliza: There's nothing that comes to mind in terms of a major disruption. Some of the better firms that I'm working with, they're all strong firms but some tend to be more aggressive in their approach. I think the technology that's available to firms and the marketplace is just evolving so rapidly that there is more of an opportunity for firms to build a tech stack that's going to better shape their business model in the future. I think I'm finding certainly over the years that I'm meeting with executives that are just becoming more and more savvy, more and more capable of doing a better job of deepening their expertise across a range of management capabilities. And that for our industry is somewhat of an evolution. We've moved from an industry which has been very fragmented in that we've had thousands and thousands of very small players that over the course of time have started to come together and we've seen record numbers of merger and acquisition activity in recent years as firms are folding into each other and we're creating these entities that are growing in scale relative to what we've seen historically. And with that comes deeper levels of capability, deeper pockets, but also deeper expertise and executive teams that are leading their businesses in very different ways to what we've seen in the past. I think the level of management expertise is becoming far more seasoned, and very rich and deep. And some firms really have extraordinary capabilities in this space. And that's an exciting time. I do think there's a lot of wonderful benefits that come from the level of M&A activity we're seeing in the marketplace. And in some cases I do really feel like it's leading to much deeper expertise and greater professionalization within the industry.
Lauren: Yeah, I agree. I'm seeing that too. And it creates, especially for some of these bigger firms, that deeper expertise or in-house knowledge—something that wasn't always there—so to be able to see that as it could shape and really change that the service offering at large potentially.
Eliza: Yeah, absolutely. And I think the clients are ultimately the beneficiaries of the fact that these firms are creating scale and have really strong dedicated management, strong advice team structures and are able to deliver a much more advanced client experience for their end clients, perhaps relative to what firms can do otherwise.
Lauren: I agree. Yeah. Robust experience and just a team of deep knowledge and to be able to have that kind of expertise at your fingertips that's integrated is something I feel like was only for kind of the bigger companies of the day and now it's still bigger in general, but is changing things, so that’s fantastic. Anything else you think would be helpful to share as we look ahead with the work you're doing or the research or conversations?
Eliza: Well, one of the things that I think I really kind of alluded to before in terms of firms going into performance review season now toward the end of 2022 and dealing with economy-wide impacts like inflation—compensation is going to be a really huge challenge for firms this year and next year. Revenue is likely to be down, expenses as a share of revenue will be up. So I think there's real merit in thinking through your strategy around compensation, but in particular cost-of-living adjustments and the use of incentive compensation to adjust pay perhaps as an alternative to cost-of-living adjustments. I think if firms are going down that path, they need to tread very carefully around making increases that are associated or connected directly with inflation to protect their financials going forward. So to me this is gonna be one of the really red hot issues that firms are going to have to contend with in this current environment. Team members I think across our industry but more broadly, the economy, people are going to be looking to their managers, business owners, and executives to address the pressures they're feeling from an inflationary perspective. And it's upon owners and managers to have a very clear view on how they're going to handle it, to be able to have the right messaging to be able to ensure team members feel comfortable and taken care of during these really difficult times. And to avoid a situation where we create disappointment and departures potentially with talent. So counsel firms in particular to be very careful around the use of cost-of-living adjustments; if you're going to do it this year, use them very carefully, be very clear with team members that cost-of-living adjustments are not going to take place every year. It might be very much a one-off and firms should be really cautious in how much they offer up this year in particular, just to make sure we're controlling fixed costs given all the other pressures on revenue generation this year.
Lauren: Yeah, that's right.
Eliza: That's probably my key kind of round out 2022.
Lauren: Yeah, that's really good advice, especially since we finished one political season, at least here in the U.S. but more of that will come and markets up and down and so it's great advice. I appreciate you sharing a little bit of what you're seeing inside of the C-suite and some of those conversations.
Eliza: Yeah.
Lauren: I appreciate your time and thank you so much for all the work you do and for supporting so many firms and giving some of those tips, especially as we look ahead for the new year. So thank you again.
Growth Strategy for a Successful 2023
