Wayne Holly, President & Chairman: Sage Rutty & Co.
Trevor Holly, Corporate V.P: Sage Rutty & Co.
Hank Multala 00:01
Well, welcome to the podcast. This is “A Chat with Hank” and I'm Hank Multala. So imagine you could turn back the clock to 1915 and then move your train of thought to today in 2020. One thing that you may not see that would survive 105 years is a financial services firm. Well, today I have the opportunity to share this podcast with two individuals from Sage Rutty & Company, but not only have they survived for 105 years, they've grown, and they prospered. So I'm happy that Wayne Holly, the President & Chairman of the firm, and Trevor Holly, corporate VP, in charge of marketing, have been willing to give up some time to join me on the podcast today. So Wayne and Trevor, thanks for blocking out some time to chat today.
Wayne Holly 00:45
Hank, we're happy to be here, for sure.
Trevor Holly 00:48
Absolutely. Looking forward to this, Hank, thanks for setting this up.
Hank Multala 00:51
Wonderful. I'm excited to do this. So as you know, one of the benefits of a podcast is you get you get detail about a firm that one may not grasp, and the pros and verbs on a website, you can only put in so much detail because then it just websites get a little bit overwhelming. So I'm really looking forward to the insights you can offer and for those who take time to listen and learn. Regarding the introduction, it's obvious you've been able to establish what you've been able to establish is incredibly unique. Is there anything else you may want to add, or can share with us that would keep the firm around for over a century when others have failed?
Wayne Holly 01:29
I would say Hank, that that though we're not afraid of change, we reinvent ourselves any number of times over the years as the industry has changed. So I think it's a really we've evolved continuously and focus on remaining relevant to our to the clients who we serve. The other piece is that we invest in our advisors and practices to help them continue to bring additional and new services so that they in fact, can continue to bring added resources to their client relationships.
Hank Multala 02:10
Wonderful. So you're not stuck in a mud like a lot of firms as they get very complacent and just sit and hope that things turn around and not willing to advance and help them, help the business and those that are involved with the business. Correct?
Wayne Holly 02:24
Correct. Now we look vastly different at these different at these different time points in time over the last number of years.
Hank Multala 02:34
Wonderful. Well, hopefully we can get into more of that discussion. Obviously, I want to bring up a current event and everybody's obviously been impacted by Coronavirus. How has the firm prepared for these dynamics? I mean, what challenges did you face, what are you facing now? How’s it going to impact the future of the business? And I don't know, you want to say there was a lot of things we did in preparation for some sort of issue that may arise similar to this or something like this?
Wayne Holly 03:05
Yeah, I mean, the good news is that we have always taken technology and backup very seriously. And so we have made large investments over a period, that would allow us to work remotely have backup systems in place. You don't think of a pandemic, you think about what happens if there's a fire in the building, or you have a server go down and how do you how fast can you get back up and running. But fortunately, we have a lot of those things in place. Within 24 hours of our governor in the state shutting things down, we had 80% of our people working remotely. Within 48 hours, we had 90% of our people working remotely. And within one week, we were working remotely 100%. So we were able to move very quickly. And that's not to say that it was perfect. We did add some tools over the first couple of weeks that would help with that transition and make things work more smoothly. But overall, we were incredibly happy with how quickly and all our people have acknowledged that that it was it went very, very well.
Hank Multala 04:21
I speak to a lot of firms, and I think their contingency plans sometimes involves separating servers two feet apart in a room. So in case of flooding, both flooded, but hopefully the water didn't go far. So it is nice that you were prepared for this. So tell me about the firm structure at Sage Rutty?
Wayne Holly 04:42
Before we before we leave that topic, let me just tell you also, we're in the process of evaluating new systems, and in early 202, we're going to we're going to have a technology spend of somewhere between $200,000 to $250,000, which will have identical systems at home and at the office for our people, so that it'll be able to toggle back and forth, seamlessly, which I think will be great. We recognize that this pandemic has also changed the dynamics where we're going to be having to offer a little more work flexibility from home for all people in the office, not just advisors. And so we want to make sure that we have a very robust system for all people here.
Hank Multala 05:34
Right. And just like you said, the firm continues to move forward, and you're not the firm, you were 10, 15 or 20 years ago. So I think that's representative of it.
Wayne Holly 05:43
As far as how the firm is structured, currently, we are a W2 firm, all our advisors are employees of Sage Rutty, and we like to call it supported independence, because we support their practices in many, many ways. And they get to run their practices the way that they feel, they want to. We have advisors who have niches, and they want to focus on those, and we help support those. We have other people who work in separate ways and want to create a little bit different practice. And so we help, we help do that as well. So it isn't a one size fits all. And the biggest thing is, is that we've put a stake in the ground years ago, that the advisors own their clients, we don't. We make that noticeably clear, we're here, we work hard every single day, to keep the advisors here collaborating with their clients. And we don't have contracts in place, and deferred comp plans to keep people chained here. We want people here because they want to be here.
Hank Multala 06:52
Right. Well, unlike most W2 firms, they own the book, it's nice to see something vastly different in what Sage Rutty does. So you mentioned supported independence, you did go into a little bit, but do you think you elaborate a little bit more on what that means to you and what the meaning is to advisors?
Wayne Holly 07:15
Yeah, I think it really comes down to is that our advisors have a vision for what they want their practice to look like. Again, they're all going to be different in some way, shape, or form. We collaborate with those advisors to help them to help them create that practice to build that practice that that they want, and they have the autonomy to do that, of course. They need to do it in a highly ethical way, compliant, and what have you. But outside of that, they get to build what they want. We have one team here that has a big 401(k) practice, I think at this point, they have something like 62 401(k) plans, as small $100,000 $150,000, up to their largest might be in the $80 million range. So really want to build on that. So we've helped them and have helped them really go after that marketplace.
Hank Multala 08:33
You mentioned in there to partnering with advisors, and I'll make it a two-part question for you? So what does that mean? And can you give me some examples of how you've partnered to help them with their professional development?
Trevor Holly 08:50
I think the partnering aspect is really a not only are there real applications for the partnering that comes with, making investments in their practices, but also just a greater philosophical alignment where we view the advisors as being partners of the firm, and to have to an advisor, I would say that they all agree, and they view the firm as partners for their success. So a lot of times, it's, like Wayne mentioned with the, with the 401(k) practice, putting together that team and putting together the resources to be able to support a 401(k) focused practice looks a lot different than any of our other practices here. So, being able to have customizable business plans with each of the advisory teams and collaborating with them in conjunction to a set and to achieve their goals. One way that we do that is, again, going back to more the philosophical view of this is we have, the zone is what we call it. Think of it as it's three concentric circles. And you've got the firm is one stakeholder in this, you've got the advisors as another circle in this three-part Venn diagram and then you also have the clients where those three circles overlap, the middle of that, of that Venn diagram is the zone. So really, we work with everybody, with those three stakeholders in mind when we're talking about investments or decisions. And it leads to any decision that we make big or small really needs to be in the center of that zone. So it can benefit all three of those stakeholders. The second that you get unaligned with that, and you are only focusing on one, and not another, things fall apart. So that's how we how we do business here every single day.
Wayne Holly 10:57
So can you give me examples of that, of how you partner with advisors. So I would just add to that, that, when we operate in the zone, we think that's how you that's how something is sustainable. If it's good for an advisor, good for the firm, but not good for the client? Well, eventually, the client's going to leave, if it's good for the advisor, bad for the firm and good for the client. At some point, the firm's going to say, hey, that's not working for me. By considering all three stakeholders, and operating in that zone, that's how I believe that you will be able to create a sustainable model that can go on indefinitely. As far as you know, some examples of partnering, I think one would be we have an advisor here who was looking to grow his team, we helped him bring some people in, we helped to invest in that, we gave him some opportunities to growth, where we would pick up all the cost, all the investment. So we structure these things creatively, so that everybody can win. What's interesting in this case, this was in place for about three years. And then there were some issues and problems that developed, and we had to jump in. And for the lack of a better term, we had to help facilitate the divorce with this junior advisor. That advisor has stayed here and is growing nicely on his own. We brought in some new people helped restructure that helped make some additional investments for a period to help strengthen and bring that back. And so he's having a terrific year with his new team. And we've again demonstrated that we partner, and we put our money where our mouth is.
Trevor Holly 13:04
And then the other good example, I think of, you know, partnering with advisors, this at a larger scale would be our Sage Rutty University program. So that's a series of free seminars, now webinars, since the pandemic, but you know, we've been doing this for almost a decade now as far as having a structured seminar format that gets the full weight of the firm's marketing dollars and support as far as facilitating the entire program that's putting together all the materials for handouts, coordinating lunches for when we were in person and for when we go back to in person seminars, a lot of marketing behind that. And it has been an incredible prospecting venture for advisors, as well as the added benefit of being a fantastic resource for our current clients. But we've been going since 2012, or 2013. And we brought in well over $100 million in new assets from the Sage Rutty University. There's no pay to play. It's firm funded, this is a well-oiled machine that advisors can just plug into and then they must create the content. We can help with that, for sure. But that would be a fitting example the firm partnering with advisors to help them grow and it's been an enormous success story for us.
Hank Multala 14:48
Yeah, I think the first time I met Wayne, I don't know about six years ago or something, he had talked a great deal about the Sage Rutty University, and it sounds like such a unique opportunity for an advisor looking to grow and develop their business and really to partner with the firm. So what else does Sage Rutty do that sets you apart from the competitors?
Wayne Holly 15:08
One of the things, Hank, that I think sets us apart is that we have firm paid for Financial Planning Department. We've got desktop, planning light, if you will. But many of our advisors have moved upstream in the clients that they work with, and in fact, the planning department has helped a number of our advisors move upstream. Because when you work with higher net worth individuals, you run into way more complicated situations. So having this having this planning department help our advisors, work with higher net worth clients, is a remarkable benefit to being here, as well as just a resource. I don't know how many times in a week that an advisor or someone else here reaches out to the planning department to get clarification or an answer to a question that a client has posed. So it's a deep bench and a lot of a lot of experience there. So we think that is something that really, really sets us apart from our competitors. The senior management here, ownership here, open door policies come down and knock on my door, come down and knock-on Trevor's door, we're actively in the business. We're not working from someplace remotely. And we're engaged with our advisors at remarkably elevated levels.
Hank Multala 16:41
I'm sure that's one of the reasons for your success, too. Same reason, you know, it’s a great analogy nowadays, but a restaurant owner, who's on site, usually find a successful restaurant one that are absent, you find that they don't last exceedingly long.
Wayne Holly 16:54
I'm going to ask Trevor to speak to our Sage Rutty 2025 initiative, because he's leading that, and I think that's important, about the future, about how we collaborate with everybody within the firm over trying to shape the future.
Trevor Holly 17:10
I think one of the things that does set us apart from other firms I would say in the sense that we're looking out to the future. I would say, most firms must be looking to the future, especially with things changing so fast. But where we may have a little bit different approach is that we are asking all stakeholders of the firm to help shape our future. And that starts with, obviously, our advisors. And we bring in clients, we've surveyed our clients on what are we not doing as a firm that you would like us to be doing. And really, from top to bottom, every single stakeholder in the entire firm is actively engaged in this Sage Rutty 2025 initiative, which is just a really, you know, we use the 2025 as a nice,kind of round number, but it's really just a forward-looking initiative, what do we need our firm to look like in the next 5-10 years, to not just be competitive, but to really, to really out shine our competition and to differentiate ourselves and we've been working on this now for over a year. I just think the interesting thing about it is the very first item that was brought up, and that we checked off our to do list for the future planning, that was a suggestion that came from our receptionist.
Hank Multala 18:45
You get you get great ideas from people who are not, actively engaged in the business, which is fantastic.
Trevor Holly 18:49
Absolutely, we have, we have great people here, we have smart people here that genuinely care about the future of this company. And when we're talking about 2025 you've got advisors and employees here that aren't going to be here in 2025. They're looking to retire in the next two to three years and they are actively engaged in, in the future of a company, that they aren't even going to be here to see the benefits of, but they just they care so much. And I think opening this communication in this planning with the whole firm, building a firm that everybody can hop out of bed in the morning and be excited to come to is important and we embrace that fully.
Hank Multala 19:33
Well, I'm looking forward to seeing you can share that with me, I'd love to see that as that moves forward, how that progresses, and obviously is again incredibly unique to this industry. So I know you've had success in recruiting advisors from all the firms. What enticed them to come to Sage Rutty and what's your experience been since they've joined?
Wayne Holly 19:53
I would say that all the things that we have talked about so far in this podcast, are many of the reasons why they wanted to be here. They had been in organizations that didn't seek their input. They've been at firms where they didn't operate in the zone. hey had been at firms where there was a lack of trust between themselves and management or themselves and ownership. And so they were looking for a change. So all those, and I also think a willingness for a firm to help them grow their practice, make investments in their practice where they were before they, they weren't willing to do that. We have one woman here who she came from one of the wire houses, when she came here. She was a mid-two hundred to $250,000 producer, surely not big enough, you know, by any stretch of the imaginations, she's coming up on just 10 years here, and she just broke over, in a big way over the million-dollar mark and she attributes that to being here, she would tell you that I couldn't do without where I was. And again, for all those reasons that we talked about, we help build out her team. She's had a considerable success with Sage Rutty University. She gets to operate in the space that she does very, very well with, which is a lot of physicians, she came from a medical family. So she knows that marketplace well and what they’re needs are. So that's that that's one example of, of somebody that came over. I'll have Trevor speak to another one, which is a younger gentleman who joined us in the last several years.
Hank Multala 21:50
I'll tell you, though, a fourfold increase in 10 years. That's amazing!
Trevor Holly 21:53
And then the arrow is pointing up, straight, straight up. Yes, if we, if we talk a direction you want it to go, in a year, she might be at a million and a half. And if we talk again, in a couple of years, I wouldn't be surprised if she was pushing on two million that the growth is fantastic there. And we had another a younger advisor come over from a local firm. He was looking for no handcuffs. What we talked about with the deferred comp and the advisors tracks, yes, the advisors owning their book and no contracts. You know, he just wanted less bs for less lack of a better term. He wanted to be around, he desired to be surrounded by high end, successful advisors, he was looking around his, his old firm. And even as a young advisor, he was already really at the, at the top of the firm there, and if not the very top, you know, second third, didn't have the kind of mentorship at his old firm that he was looking for, and was blazing his own path. He wanted to be a million-dollar producer. One of the things that attracted him to Sage Rutty was that we have an office that is full of million-dollar producers and anywhere he turns, he's gonna be able to pop into someone's office and ask them a question. And it speaks to our collaborative nature. Again, we are not the advisors here are not in competition with each other, we help each other, and we help each other grow the successes of every single advisor raises the bar really for the entire organization. And he felt that he also wanted to elevate his status as far as the kind of clients with which he was working. And he has seen just remarkable success over the last couple of years, fully embracing our planning department, and being able to really climb that ladder as far as the quality of the prospects that he's sitting down and talking to and being able to land clients and I don't know if he would have been able to land three, four or five years ago. And again, common thread with them, a lot of these advice he's really embraced the Sage Rutty University opportunities and has just absolutely run with that and has had every year he's been here. He's had remarkable success with Sage Rutty University. So that's been another key factor in his in his growth since he's come here.
Hank Multala 24:42
Yes, those are two greatest success stories. And I'm sure there's more and I'm sure there's more to come. So, Wayne, I know you and I have discussed this subject before and there's obviously an interest in considering growth beyond just a regional marketplace. What do you ideally envision?
Wayne Holly 25:03
Yeah, if we could find the right people, the right cultural fit, we would have no problem with expanding out of our normal geographic area, I think that we would probably want to keep it within at least a day's drive from Rochester, New York, I think it's important to be able to connect, because our culture is such an important aspect of who we are and the kind of people that we would attract. It would need to be people who really embrace planning. We don't know how you can advise people on their investments and other pieces of the puzzle that touch their financial life without really understanding everything about them and have a plan. So if we had the right kind of people, the right, philosophies, and they had, enough production to warrant an opening of an office, we would absolutely be interested in looking to do that. And we think that we could translate what we're doing with Sage Rutty University, into other marketplaces, because we've learned a lot over the last eight to 10 years, we've got a great jump on any kind of competition that wants to want to go down that path.
Hank Multala 26:35
One of the things that I hear all the time now, and I think it's going to be a big driver in our industry in the next, it's not about payout anymore, it's more of does my character fit in with the culture of the firm. Because if you can find a firm where you're aligned with them, and they go in the direction that you want to, you're holistically based, you focused on financial planning, you're focused on the Venn diagram, you talked about that everybody benefits as a result of any changes or anything you implement, it's going to be the driver in our industry, because that commits itself to long term relationships versus these three or five year relationships you quite often see in our industry. So looking ahead, 5-10 years, biggest challenges you think you may face, or the industry faces in the next half decade or decade?
Wayne Holly 27:29
The search for talent is always a challenge, especially as a smaller firm. I think that getting our story out there that were certainly an extremely viable solution for an advisor, telling our story and how they can thrive in an environment like this. But I think from an industry standpoint, there's going to continue to be fee compression. It may not impact some of the older, more senior advisors who have those established books of business, and what have you, but certainly the younger advisors coming up, they're going to see more about that and regulation, which doesn't seem to let up at all. And I think that's going to continue, at least for the near future, that we'll have to be dealing with additional regulation a lot more, which is going to impact how advised how many accounts and family relationships, advisors can manage so they can make sure we have the right technology in place, so that people can manage more relationships efficiently. And then I think one of the things that is going to come out, this is just my prediction, is that there's going to be a bifurcation between investment advice and planning advice. In a lot of cases, we've been giving financial planning away, because we've been getting well paid for the investment management, the investment management fees come down, we're not going to be able to afford to give the financial planning away, so I think you're going to start seeing people paying more for financial planning. And they're going to start paying less for the investment management as that becomes more commoditized. You’ll get artificial intelligence blooms that starts to grow and become more prevalent, and things like that. So I think that advisors will differentiate themselves more through the financial planning than they will from the investments. And again, that's just my own prognostication of what's its gonna look like in the future.
Hank Multala 29:53
Well, you've been around for 105 years, so I wouldn't take any of that with a grain of salt. You have a good vision on the future of the industry. And there's nothing there that I would disagree with you about what we're all experiencing.
Wayne Holly 30:09
And I would also just say that we are actively working our succession plan. I've been in the business for over 40 years, we've continued to remain relevant, and we are actively working a written succession plan, we're not just winging it. So we're focused on that, both individually, as well as our board of directors and as a firm. We talk about it all the time. And we're preparing the firm for success for a fourth generation. I'm a third, Trevor is a fourth generation that's been involved in the leadership of this company.
Hank Multala 30:47
That's fantastic. Consistency lends a lot to credibility. So I know we want to wrap this up. You've provided information on how important it is that there's active engagement, at Sage Rutty, that there's a partnership with advisors, there's a there's an incredibly unique discipline and approach that is rare in our industry, and the ability to share in the growth and development of the firm. And it's nice to see, even though financial advisors compete against each other in the marketplace, one thing that's incredibly unique at Sage Rutty, is they're willing to share best practices, and ideas. And I know that from reading and knowing you, Wayne and just what you've disclosed today, is there anything else you'd like to highlight before we wrap up for today?
Wayne Holly 31:38
Would just say that there's a couple of things. First, we're wrapping up the end of the year, so we're going to be contributing 20% of our pretax profits, to a profit-sharing plan. So that number is significant, right before year end. So you can participate in that. I think we've also opened some ownership opportunities for advisors here in the firm. We have a number of advisors who are shareholders in the firm and so we're immensely proud of that. And then the last thing, I would just share what we call our core values, but also what we call our Sage Rutty core purpose. So with that, the Sage Rutty core values are do the right thing always, encourage individual ability and creativity, build a positive team and family spirit, and strengthen and enrich our community. So those are the core values that we live by every single day, and we celebrate them. We talk about them all the time. And then the Sage Rutty core purpose is Sage Rutty is the partner of choice for financial professionals seeking supported independence, an engaging peer network, extraordinary client relationships and the opportunity to shape the company's future. I think that's important for advisors that may be listening to this podcast because that is that is who we are all about. And I really appreciate the opportunity to share those with the listeners today.
Hank Multala 33:19
Absolutely. Well, Wayne and Trevor, thanks for taking the time and providing a lot of detail and educating the audience on what differentiates Sage Rutty from others. For those of you who want to find out more, you may find them at Sagerutty.com. Gentlemen, I wish you the best in your continued success, which I have no doubt that in 125, 150 or 200 years, you're going to be flying a banner someday that's going to wave proudly over your firm. So gentlemen, thanks again for your time today.
Wayne Holly 33:52
Thanks again Hank. We appreciate it.
By Hank Multala, Founder, Adviser First Partners L.L.C. on 08/05/2021 11:10 AM