If you're running your own RIA, this episode's guest says only two metrics should matter: Growing your clients' wealth and increasing the enterprise value of your firm. Steven Tenney is a longtime advisor who is now embarking on a new professional venture as a coach who aims to get the most out ofhis clients. He and Jay Hummel, host of "The Deep Dive," talk about some of the best ways to grow and optimize an RIA firm.
Steven Tenney:Steven Tenney founded Grandview & Co., a consulting firm he created to help RIAs optimize and grow their businesses. It’s a space Steve knows well, having been the founder and CEO of Great Diamond Partners, an RIA based in Portland, Maine. Previously, he spent more than 25 years at UBS Financial Services, ultimately working as a senior portfolio manager. Steve is a graduate of Tufts University and resides in Maine.
Video Transcript
[00:00:06.52] - Jay Hummel
Hi, this is Jay Hummel. Welcome to "The Deep Dive" in collaboration with Investopedia. I don't get to do many episodes, which I'm so excited about, with people who I have really never interacted with, but I've heard a lot about Steven, our guest today, and nothing but great things. Steven, welcome to the show. So glad to have you. Give the viewers a little bit about you and what you're up to.
[00:00:31.64] - Steven Tenney
It's a pleasure, Jay. Thank you. After 26 years at UBS and PaineWebber, I launched an RIA, Great Diamond Partners, in Portland, Maine. That was in May of 2019. In May of 2024, I left the firm and started Grandview & Co, which is a coaching consulting company with two primary clients: one is owners of RIAs, and the other is people at the bank, the wirehouse, that wants to go independent—that might be a tuck-in, or it could be launching a brand new firm.
Maximizing Enterprise Value With Processes
[00:01:10.95] - Jay Hummel
It's so needed right now, with all the PE firms coming in, and these owners are getting called 10 times a day by people who want to buy their firm. One of the things that you said in your email to me was to think about processes. So, how would you instruct an owner to think about processes?
[00:01:44.14] - Steven Tenney
First, if something is done more than once, create a process and document it; everyone needs to know where those documents are. It's so important that everyone follows processes. If people don't, you'll get instructions from advisors or leadership to the admin staff, for example. Those instructions are inconsistent, and they create frustrations because people are not quite sure what to do.
[00:02:21.01]
Sometimes, the output is not accurate because the instructions are inconsistent. If you can have great processes and everyone follows them, predictability increases. For the rest of the team, it reduces stress. When predictability flows through to clients, they get a [positive] experience with the firm that has a good chance of increasing client referrals.
Chasing a Bottom-Up Process Culture
[00:02:55.99] - Jay Hummel
How do you see that working? I think a lot of times, the advisor owner is not very good at processes. They're great relationship people. I don't mean it in a negative way; they're great salespeople. It's how they've grown in RIA because you've got to be able to get clients. I've seen the best way is to create an environment with a bottom-up approach to the process instead of top-down. Do you agree with that?
[00:03:24.52] - Steven Tenney
I've seen exactly the same thing, especially for people who have been in the business for 30-plus years. They're not incredibly tech-savvy. They do things a certain way, and then changing that up because a process has been thrown at them can be difficult.
[00:03:46.73]
I guess a couple of things come to mind. One is having an assistant who does it all for you, where you give instructions to them, and they interpret and transmit those instructions to the rest of the team. Another might be limiting the scope of what that advisor does. So maybe they don't have all the processes and have no business doing certain things. Just insulate them from the things that they shouldn't be doing.
Building a Team Around the Client
[00:04:21.86] - Jay Hummel
And you said something really important, which I'm always interested in, given the landscape and the view you have in the industry today. When you were in the wirehouse and then went to an RIA, I think one of the things that you just said was really important was the team. The best-run RIAs, in my opinion, have teams around clients. How are you thinking, and how are you seeing RIAs do a great job today by building a team around the client so it isn't advisor-centric?
[00:05:07.84] - Steven Tenney
I think it needs to start right from the beginning when that relationship starts with the client. They come in, and they're introduced to the admin team, to maybe a junior advisor, whoever will be doing a lot of the communication. When you're building your team, it's the right person in the right seat, which is a term from Gino Wickman in the book Traction, who created the EOS: Entrepreneurial Operating System. I'm a huge fan of it.
[00:05:40.73]
Sometimes, the right person is not doing the right thing, which must be addressed. But when it comes to that age-old dynamic of being very advisor-centric, it's gradual. It happens early, and you've just got to stick to it. You need to communicate a lot with the client.
The Challenges of Advisor-Centric Models
[00:06:07.42] - Jay Hummel
Yeah, it's hard because you get so many demands, as you and I are former advisors. You feel like the time you take to deal with a team member is time that you're not spending with a client. Instead, it's realizing that if I take an hour now to help that team member understand to save me five minutes in the future, over time, I win. But it's hard to do that.
[00:06:35.87] - Steven Tenney
The other thing I would add, Jay, is that if you've got a great assistant, you should get them involved and may have them do outbound calls. I got to the point personally where it seemed like 80 plus percent of inbound communications were not going to me; they were going to my assistant because most of what's needed is administrative. They develop great relationships.
[00:07:03.05] - Jay Hummel
Let's be honest: when you have a good assistant, they probably like the assistant more than they like us.
[00:07:10.36] - Steven Tenney
I'm not going to argue with that.
The Risk of Breaking Away from a Wirehouse
[00:07:19.12] - Jay Hummel
So, let's shift gears a little bit. You mentioned breakaways, obviously coming out of wirehouse. We spend a lot of time together in my business trying to take people out of a captive environment and help them start an RIA. What are you seeing in today's marketplace?
[00:07:38.41]
I think one of the things that's so interesting to me is that advisors and people who watch the show, always talk to me about how it feels so risky. What kind of conversations are you having around that topic with people you're working with?
[00:07:55.06] - Steven Tenney
First of all, I think the risk is perceived, and not really actual. It is emotionally very difficult to make that leap. I'll never forget those couple of days surrounding May 9, 2019. It was a big deal. And you're walking to your new office, you're throwing a big party, you hope someone shows up.
[00:08:24.16] - Jay Hummel
Yeah.
[00:08:25.06] - Steven Tenney
The way it works, 95 percent of your business transitions over because it's all about relationships. I think a lot of the perception is created by the incumbent wirehouse, and they just say it's independent—I mean, Schwab and whatever the custodian is, they don't speak highly of that situation.
[00:08:49.22]
There is one dynamic that's been coming up lately with some folks that I've been talking with, and that is, and this is very real, the issue around support staff. I'm talking to advisors who have 180 to $250 million as a sole advisor, and they have a fractional assistant like they're one of five advisors working with an assistant. It's a huge book of business.
[00:09:18.72]
This advisor knows darn well that they need to have an established team and project stability. When they call up Mrs. Jones and say, "I've got a new firm," they don't have that person. So, that is a very challenging dynamic that can be dealt with. But there's no question; that's an issue, and I'm seeing it.
Breaking the Wirehouse Myth
[00:09:44.30] - Jay Hummel
Yeah, it's an interesting time, and to your point, not to bash the wirehouses in any way, but they do create this veil of well, it's impossible to do it without our help. And when you really look at it, many cases were not providing that much help to the advisor. My analogy has always been to look at your business card; if you're sitting at Morgan Stanley, Merrill Lynch, UBS, or any of them, if the logo matters more than the name, then you stay. If the name matters more than the logo, you leave.
[00:10:31.28] - Steven Tenney
Yeah, totally agree.
What People Aren't Talking About In The Wealth Management Industry
[00:10:33.62] - Jay Hummel
What's the one thing you think people in our industry aren't talking enough about? Whether that's RIA or macro industry issues, I always like asking guests to talk about what they are thinking about and what they're not hearing about in the industry press.
[00:11:04.86] - Steven Tenney
If you think about the firm's objectives and the owner or owners of the firm, it seems there are two primary objectives—deliver an incredible client experience, or client results.
[00:11:22.25] - Jay Hummel
Yeah.
[00:11:22.91] - Steven Tenney
You can define that any way you want. The other is to grow the enterprise value of the firm. If those are the two objectives and someone is willing to do whatever it takes just to nail those objectives, I think they will take a very different view around the structure of the firm. I think you're going to be in a place where in-house you've got people entirely focused on relationships and business development. That's it.
[00:11:53.77]
That means outsourcing. It means outsourcing your CIO, tech, finance, compliance, HR on and on and on and on. Now, it takes someone like you, Jay, to coordinate those pieces, but it's very doable; it can be less expensive. You can get an incredible product. It's more nimble; it's more scalable. Everyone within the walls, the physical walls of that RIA, is entirely focused on great client results and business development.
The Case for Outsourcing at Your Firm
[00:12:29.81] - Jay Hummel
Well, you see me smile because I'm sure the viewers are tired of hearing me talk about it. It's been my mantra ever since I ran an RIA, outsource everything that isn't client-facing because it just doesn't matter. There are so many great vendors today, and there weren't these great vendors 20 years ago.
[00:12:50.07]
So it's like, why would you waste any mental energy, any mental load at all, on doing books and records, compliance, or picking Coke versus buying Pepsi? It makes no sense. Spend time, eyeball to eyeball, with clients. And to the viewers, as I said, Steven and I had not met before, and we did not prep for this, so that was not a planted answer.
[00:13:15.70] - Steven Tenney
It's not at all.
[00:13:16.59] - Jay Hummel
It's ridiculous to me that people spend time on anything that isn't client-facing.
[00:13:21.96] - Steven Tenney
Yeah, I completely agree.
Closing Thoughts
[00:13:24.45] - Jay Hummel
Well, Steven, Thank you so much for coming. Man, I hope you're willing to come back. I was telling [Steve] as we were logging in: The most embarrassing story of my career is that I was just out of grad school, and I was asked to go to Portland, Oregon. I didn't know there was a Portland, Maine.
[00:13:46.59]
I showed up in Portland, Oregon, to work on a project for a consulting firm, when I was supposed to be in Portland, Maine. So I now know Portland, Maine, is there, Steven. I look forward to coming up and seeing you at some point.
[00:14:00.01] - Steven Tenney
Well, it's a great place. Please come and Visit.
[00:14:02.52] - Jay Hummel
I'm not coming in January. I'll come in June.
[00:14:08.10] - Steven Tenney
Well, Steven, thank you. Thanks for watching today's show. And actually, Steven, real quick, before we end the show, how do people get in touch with you if they want to do business with you?
[00:14:16.59] - Steven Tenney
Sure, my email is steve@grandviewandco.com.
[00:14:23.94] - Jay Hummel
You'll hear from people, it never fails. So, thanks again. We'll talk to you soon. Thanks for watching the deep dive today. We'll see you next time on the show.