Ep. 14-Bicknell & Lockshin, Mariner & AdvicePeriod

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Wealth Management v2.0: The AdviceTech Revolution, Episode 14with Marty Bicknell, CEO of Mariner Wealth Advisors and Steve Lockshin, Founder and Principal, AdvicePeriod

Gavin Spitzner (President, Wealth Consulting Partners, LLC):

Welcome to the "Wealth Management version 2.0: The AdviceTech Revolution Podcast," where we are focused on the business of the business, the business of advice, and specifically, we study and celebrate firms that are leveraging the combination of technology and humanity to deliver better advice to more people, and better outcomes for more people through that combination.

We usually begin these podcasts with origin stories…CEOs of mostly RIAs talking about how they got their start and how their firms got their start. Now, I've already done that with our two guests, Marty Bicknell and Steve Lockshin last year. And in fact, their recent news, how they've merged -- and we're going to get into that -- brought me out of my little mini hibernation. I haven't done these for a while…I’ve been busy! But this was too exciting to not ramp this back up. 

So Marty and Steve, I'm going to turn it over to you. You announced your deal to bring AdvicePeriod and Mariner Wealth together on July 20th, I believe it was. Welcome to the podcast, and let's dive into it. Marty, maybe I can start with you. Tell us about the origin story around this exciting combination.

Marty Bicknell (CEO, Mariner Wealth Advisors):

I'd be happy to. And Gavin, thanks for having both of us. I'm very thrilled to be here. Steve and I have been friends for a long time. We got the opportunity to meet each other at an industry event and really became fast friends. Steve invited me to join a study group of his that is exclusively of YPO individuals in financial services, which, that, you know, created an opportunity for us to spend more time together. Frankly, it created an opportunity for us to understand each other's businesses and each other as individuals and leaders and really what made each of us tick. Steve will talk to this, but I posed the question of joining forces to him probably every day for the last five years. 

Gavin: You wore him down?

Marty: And finally, it finally brought the opportunity for us to do that. Maybe I wore him out.

Steve Lockshin (Founder and Principal, AdvicePeriod):
It's not the only thing he asked me about, he always asked to bet at golf too. So there's that. But, yeah, I think it was a confluence of events that finally made it the right time to do some. But, yeah. So we've gotten to know each other really, really well, which is taken me from...and I cannot tell you how many of my clients and friends have said, "I thought you told me you would never sell the business ever again." So I'm walking that back a little bit. But I do think this is different because we know each other so well. And, you know, I went through the, "What if I want to do this? What if I want to do that?" And Marty had all the right answers.

Gavin: So you both know if there's a million reasons to do a deal, there's a million and one to not do a deal. So talk about that. And there's crazy money flooding into the space right now. My guess is if you, Steve, from your standpoint, if your sole focus was getting top dollar, there might have been other paths to go, but we all know there's much more to it than just the finances. So can you kind of speak about what, beyond the friendship, what specifically about this combination? 

And Steve, I'll start with you this time. What led you to say this is the right decision?

Steve: Well, I think you definitely hit the nail on the head in terms of we did not shop this deal. There was nobody else that we talked to. There was only one potential buyer. We can all agree Marty got a great deal on our business, mainly because of the people that work there. But, what made this the right opportunity was... I've historically built businesses up to a certain point. And then we've had transactions. And part of that is a lack of interest in building them beyond that point, whereas Marty has demonstrated... I mean, we were a fraction of the size of their company. He's done this. And I truly believe he would build the business faster than I would. What I believe, and he can speak to this, attracted him to us was I focus on different things than he focused on. And so this was, one and one equaling three, or as Marty likes to say Rule 113. It was just the right fit, right time, right opportunity. I also think this market is changing dramatically, and very, very quickly.

Gavin: How so?

Steve: Well, I mean, it's in the information you put out. Look at all the PE-backed companies right now. This is going to consolidate. I mean, we've been talking about it for... Was it 25, 30 years since the first paper came out on this? It's happening, and it probably will continue. And there will still be a cottage industry, I believe, but the major players are going to have capabilities that the cottage folks are going to have a difficult time keeping up with.

Gavin: Absolutely. Marty, how about from your perspective? You are very active in the acquisition space. Why beyond the friendship, why AdvicePeriod? 

Marty: One of the things Gavin that we've talked about before is our acquisition strategy as a talent acquisition strategy. So we're not gobbling up AUM or EBITDA for the sake of that. We really want talent. And Steve mentioned this before, but, I mean, the talent inside his organization is absolutely incredible. But the other thing that I think is really important is when you think about being a holistic wealth firm, to be holistic, I truly think that you have to have those capabilities and talent in-house by taking the approach of being the quarterback and bringing in the external tax expert or the external legal expert, or things like that. That's not being holistic.

And I really think that this gives us both the opportunity to do is we were both really strong at doing what we do, and a few things crossed over. But there's so much that AdvicePeriod does that we don't have the capabilities of doing. And there's so many things that we do that they don't have the capabilities of doing. And being able to bring that combination together and then using the term "exploit" positively, to exploit that is really what led the two of us together.

Gavin: Right. And one thing that caught my attention in the press release was, unlike a lot of deals that are just about scale and EBITDA, you spoke in pretty detailed specifics about how the merger will enable you to better serve clients, different types of clients. And you talked about things like technology and broadening of services, trust companies services, business management, tax services, estate planning. So talk to me a little bit about how those things are coming together, what you have, what you're going to be building out together along those lines.

Steve: The tech piece is obviously something that I focus on, not that Mariner isn't also focused on. I think any successful firm has to have a focus on technology. But let's say that we like to stay close to the bleeding edge, and test new things, and build new things. And Marty and I have invested in a ton of these together and use a bunch of them. And one of the things I'm very focused on now is Vanilla, and that's a template that we'll be able to use at Mariner to accelerate how we serve those clients, which I think is... certainly estate planning is the last frontier of what advisors are touching for clients, and we want to be on the bleeding edge of that.

Law firms are historically antiquated. Very few are tech-enabled. We think that tech enablement will allow us to do a more consistent, higher-quality, and really, ultimately a lower-cost job for our clients. And Mariner's got over 25,000 clients now, and that's growing. And so being able to serve those folks effectively and efficiently is one of the things that's really important.

And trust services traditionally have been a tool for just getting assets under management for the most part. It's like, "Oh, sure, we'll be your trust company. We're going to charge you based on AUM." So it looked like just another way to be an RIA, but people really do need trust services. Beyond that, they need fiduciary services. And we've done a lot of thought. As Marty knows, this has been another kind of passion topic for me for over a decade. And the size and capabilities of the organization and the financial strength of the organization will let us build some of these out, so, again, we can better serve clients. And so back to us having complementary skills, I'm highly focused on the client experience and delivering new solutions, and Marty's focused on talent acquisition and growing the business. And so we really have complementary roles in what we're doing.

Marty: Yeah. What's interesting is the way Steve just said that. So the complementary roles, really do lead us to the one-plus-one-equals-three piece of it. So, Steve focusing on client experience, and I really like to focus on the advisor experience. And the things that Steve is building, the service offering, and marrying that with the technology will make both the client experience and the advisor experience elevated at the same time.

Gavin: Makes sense. Maybe I'll use this to pivot a little bit. So from an outsourcing standpoint or affiliation model standpoint, Marty, maybe I will start with you on this front. You've historically had different ways that advisors can avail themselves of different capabilities, whether it's fully joining up or through more of a... I hate the term, but I'll use it, as shorthand, a TAMP-type offering. Can you speak to, especially in light of some of these other business management services in estate planning, to what degree you're thinking about those beyond just your four walls in terms of your advisors, and different ways advisors can tap into those capabilities?

Marty: Yeah. I think that for the most part trying to position our organization and continually trying to position and elevate it really as an advisor is our traction model. And, if you think about impacting the client, client retention, and growing the number of clients, putting our focus on the advisor is the quickest way to do that. And by having unique offerings and a unique platform, that is the Mariner platform, and the things that are within that, I think, elevates us and differentiates us. So we are not building that differentiated model to open it up to the masses. I mean, it's being built for our advisors.

Gavin: That's great. I want to shift a little bit to technology... When you said elbow-to-elbow, maybe you think of where are we and what's going on? When I spoke to both of you individually last year, we were at that point just a few months into COVID. I think we all thought or hoped that we were coming out the other end fairly soon at that point. It's hard to believe where we are at least in big chunks of the country. But I'm curious, looking back now, whatever, 18 months or so into this, lessons learned, how you're leveraging technology, how client engagement is shifting the implications around new business development, the organic side of things, what you see as being permanent changes, and specifically in terms of the use of technology, virtual engagement and the likes? So Steve, maybe I can start with you on this front.

Steve: I think with respect to technology, COVID jumped us, I think, a decade ahead in terms of adoption of video conferencing, just like we're doing right now. The challenge will be how quickly it snaps back to the old way of doing things. And we saw during our brief respite from this lockdown, which may resurge again, that people were going back to doing some more face-to-face meetings. I had a client that I've had for 30 years who's 90 years old, who said, "We'll do one virtual. I want the rest of the quarterly meetings to be back to face-to-face."

What I've experienced, and I think most people experience, is we're way more efficient doing these. I mean, literally, I could say to someone, "I got a hard stop at 10:30. I'm getting on another call." And there's no travel time. And there's no...you know, just talking. That's the good part from an efficiency standpoint. It's a bad from relationship building, and relaxation-standpoint, so you got to find other ways to enjoy that.

For a business development side, everyone, our friends, Mariner I assume will be the same, but we had a great year last year. We're having another great year. I've closed so many large clients that I've never met. Some of our largest clients are people who joined the last year or two. I literally, before this, just finished dealing with a client and is a new client who signed up on estate planning. Never met him. Did everything on Zoom. So I hope there's a healthy balance between these two going forward. But personally, I like not traveling all over the place and losing two days to see one client for two hours.

Gavin: Yeah. You can be so much more productive. I should look back. You said last year, it wasn't clients holding you back, it was oftentimes advisors that were resisting. Maybe not at AdvicePeriod, but industry-wide. Do you hear that a lot?

Steve: AP too. Yeah, I think advisors are the problem. And I'm sure I've used the example. Everyone's parents have iPads. I mean, my dad is 80 years old. He's on his iPhone, he's on his iPad, he can do anything and everything that we can do effectively and enjoys doing it that way. As he used to say, "I pay extra not to go to one of those meetings." Now, he can do it. And by the way, I charged him extra so he didn't s have to go. But now we can do these things. Advisors are the ones who say, "Clients don't want paper reports." No, they don't, they want a portal. They want to be able to look at it on their phone. Or, "Oh, the clients don't want to understand it." They do. They want access and they want to be able to make their decisions. So I hope that consumers use this opportunity to push advisors to be better. And we'll see the people that adopt and the people that are left behind. And as I said, there'll be the cottage industry or the folks who still are using Abacus and have paper and whatever. But I don't think the industry as a whole is going to stay there. It's going to accelerate and maybe catch up to where it should be because we've been woefully behind in technology for the last couple of decades.

Gavin: Marty, thoughts?

Marty: Steve covered it pretty well. I think we talked about this the last time we talked, but the technology platforms that we rolled out, we had 15% to 17% adoption, pre-pandemic. I mean, three days in, it's 100%. And, without the pandemic, we might be at 20%, 22%, something like that. I mean, I'm sure it would have increased but not to the level that it has.

And at the end of the day, the client will choose how they want their advice. And we have to meet them there. And one of the things that we're hearing... I mean with a significant portion of our locations and our advisors in the Midwest, I would jump to those are going to go back to face-to-face quicker. That's not the case. I mean, it's the same, it doesn't matter what location we're in. It's the same. People are busy, and nobody wants that travel time.

Gavin: Yeah. Certainly not in LA, Steve?

Steve: No. No. I'm fine not going back to the office. And who knows what we're going to do. And I think we'll have some hybrid because there is value to having meetings face-to-face. I mean, we've hired in the last year and a half, I don't know, 40 people that I've never actually seen face-to-face, other than on Zoom. So there is that aspect, and I know our younger folks miss the social aspect, and we're very much an apprenticeship shop. So as Marty said, you get to sit with someone, you're working on clients that are way more complicated than you might work on in other places. And it's good to have someone able to point at the number on the screen and go over things rather than circling it with your mouse and trying to do it. It's a little more difficult sometimes. So there has to be a healthy balance between the two. I hope we, as I said, stay with a lot of the things that we've picked up and don't revert too much, but there are certainly social interactions that need to come back a bit.

Gavin: Right. Let me get you to give a little advice to the technology firms out there. Right? We need them to be doing the right things to help us. So let's look at it two ways. For existing tech providers, if you speak directly to them, what do they need to do a better job of to help drive adoption in real effective usage, but then also, for someone sitting in her garage someplace thinking about the next best thing, what's still missing? And I know you collaborate on different investments, especially on the startup side, so maybe take a page from that. What excites you? What are areas that you think are under-delivered right now from a technology standpoint? So speak to incumbents, the bigger firms, what do they need to do a better job around? But then also, where are those gaps that people should be thinking about building out capability?

Marty: Well, in 90% of audiences, I would tell you that I'm the appropriate person to answer this question. But in this one case, I'm going to be quiet and let Steve talk.

Steve: A chain is only as strong as its weakest link. And so the custodians, unfortunately, are the weak link in the chain when it comes to technology. And this won't be a surprise if they end up listening to this. And they're trying.

Gavin: I think they’ve heard that.

Steve: Yeah, it's hard to turn a big ship. I also think large institutions can't get out of their own way. They're like, "Oh, we can develop that, we're XYZ Corporation." If you work in XYZ Corporation as a developer, you're not one of the best. The folks who are creating, who are doing new things, don't shave, workout hours, want to work out of their home, they want freedom and flexibility. Startup organizations don't look like big companies. And we've seen this time and time again where big companies have tried to build a startup-type culture. And you can't take someone from a big company and tell them they can wear tennis shoes to work, and that makes them a techie.

So I think, first and foremost, it's automation of account opening, transferring of assets, getting... For the incumbents, it's making things more accessible and digestible. And I always go back to the iPhone. It was the first piece of technology you got that did not need a manual. It was intuitive. That's what our software needs to become in this industry, is intuitive. And in a lot of cases, you just have to learn something new. I mean, Salesforce is incredibly successful, but as Marty knows, we're both on Salesforce, we were before we were together, you need engineers that are full-time Salesforce people to get it to do what you want it to do, and then you're married to it forever.

If you really think pure capitalism, democracy…if someone's not doing a good job, I want to make it really easy to move to the next place. And so that means how data is owned, right? Right now, there's a wall around data in a lot of places. We think the client should own the data. And if they want to fire us and go someplace else, that should be at a flick of the switch, because we want to be able to acquire them when we're doing the better job in a flick of a switch instead of making them go through the torture of re-setting up everything. Around password...

Gavin: It's the firms that are playing defense that don't like that…they want to make it as hard as possible.  

Steve: Exactly. But it's not just the firms, it's the software companies too. If you want to go from a financial planning software to another financial planning software, you’ve got to set everything up again. It should be a token. I should be able to use my token and flip on Company A and flip off Company... not literally flip off, but turn off Company B. And they may want to flip them off. That's where we need to catch up, because the tech is there. All the stuff is there to do this. It's that the industry doesn't want to do it because as I say often, we are the most overpaid industry, and I mean all of financial services. Right? We're 6% to 8% of U.S. GDP, and 30% to 40% of U.S. GDP profits as an industry. It's the Great Train Robbery. And so why don't we turn a little bit of that back to make sure we're just doing an unbelievable job for the consumer, and tech enables a lot of that. I can keep going, but I know we only have a few hours.

Gavin: Well, Marty's the tech expert, so anything you want to add or correct Steve on?

Marty: No. You will never hear me correct Steve on anything technology.

Steve: I may be wrong, I'll just debate it.

Gavin: Anything coming down the pike that you want to talk about, whether it's on the tech side…crypto…I think you're both involved in some way on digital assets, both from an investment thesis standpoint but then also technology. Anything on that front?

Marty: Steve, why don't you do the technology one and I'll take crypto.

Steve: I mean, lots, as I mentioned, and Marty was an investor before we were together. It's a separate company but the stuff we're doing in Vanilla has really turned into a platform around wealth intelligence. And as we add things like collecting information from the client, account setup, paperless account opening. I mean, I see the client evolution, any advisor being... And it's why we both invested in Just Invest because they did something we wanted that's in this chain. I see it being basically a circle that says this, "I meet you, I want to collect your information in the most efficient way possible. I want to know everything about what you own, and the basis of that. I want to know the most tax-efficient way to get it from where you are to where I want you to be. I want to be able to push a button to open all the paperwork and execute on that set of recommendations. And then I want detailed accountability and proactive activity around the things that need to be administrated properly. And I want technology to do most of that."

And those are the things that we invest in. And that's the stuff that we're trying to build, so that, to Marty's point, at Mariner, advisors have been able to spend more time in front of clients because they don't have to worry about prospecting. Well, now, if the number is 80, I want to take it the 99, because technology should close that gap. And if you think about the advisors that are spending less than 10% or 20%, the amount of opportunity they have to not only do a better job, but to serve more people, because there will be fee compression at some point in the future. I don't know when it's going to happen, but there will be some fee compression. You're going to have to use technology to make up the difference that you're losing because you're going to go down because of technology.

Gavin: Well, and you have to. Like in my Weekly Reader that you guys get, we talk all the time about all the non-financial things that clients really want to talk about and want to help with. It's not, "Can you beat you the benchmark by another 10 basis points?" So you need the time, but then you need the expertise, you need the tools to be able to do that at scale and effectively. And just to build on one thing you said, I couldn't agree more that that process of data collection and onboarding, there's so much focus on financial planning, which I think is great, but I find too many firms they just hone in on that as, "We're leading with planning. We're leading with planning." And it sounds great, but you need to do some of those more basic blocking and tackling things around data collection, getting that full picture to inform the plan, but it's not... Sometimes I see advisors jump too quickly to try and do a comprehensive plan as the starting point, when there may be other things that matter more to a client, and you build up to that. Because one thing I didn't hear you say in that kind of experience or journey, was financial planning, the traditional way the industry talks about it.

Steve: Yeah. Financial planning has become the new mantra. It was asset allocation before, and then manager selection and reporting. But I think financial planning, we have overcomplicated to serve our needs of, "Well, you can't do this on your own, so you're going to pay me a big fee to do it." But the math is very, very simple. You can do it on the back of an envelope generally. Unless you're dealing with specific tax nuances. So I agree with you.

The first rule they teach you is don't spell the client's name wrong. So back to data collection, if the clients are filling the information in, it should be filled in once, it should be filled in by the client, and everything else should read from that. And that's the integration of software and the seamless execution is what I think is missing. And that's what needs to happen in the next few years for advisors and clients alike.

Gavin: Well said. Marty, add to that, but then also wanted to hear about your thoughts around crypto.

Marty: Yeah. I think that you both covered that piece of it well. I think from the crypto standpoint, I won't sit here and position myself as a crypto expert. But, , I do invest in it and have invested in companies that are trying to serve the RIA community. And, for me, it's about access. And, clients want to talk about it, whether or not it's appropriate for them or not. It's, a one-on-one conversation. But for us as an organization, if we were going to bring an offering out, it had to be one that had transparency, it had to be one that allowed our clients to own the coins directly, and not through something that had layers upon layers.

And so by bringing out a separate account program, that the management of it could be turned on or off at the discretion of the client or the advisor, was really important to us. And so we have that capability today, and we'll continue to have it in, as I know we did one of your podcasts on this topic. I mean, it's still a slow process. And it's still one that we demand our advisors to go through an education process before they're "approved" to be able to put clients in it. And, where it goes from here, who knows? But I do think that it's about access and being allowed to find those unique offerings is something that I believe in.

Gavin: All right. Access, education at minimum, and then people can figure out how proactive they want to be around actually building it into models in all those things. It's interesting. And you said you don't proclaim yourself an expert. Anyone that does, you immediately discount their credibility. I've been investing in it on a small scale for, I guess, six years now, and, you know, I constantly wonder like what is it? If it's a currency, how is it an asset class? And you can... You know, blockchain, and where does that fit? It's evolving. It is evolving.

Marty: Evolving.

Gavin: Steve, any thoughts on digital...crypto?

Steve: I'm still curious. And I'm even more curious if anybody tries to work it into a model because I don't think there's enough good data that would let you do it. So to me, it's something like, "This is interesting. I'll try some of this." But the blockchain topic goes right to what I was saying about tokenization. I mean, that's where I see the ultimate application of blockchain and any blockchain derivatives, is moving data to the consumer. I mean, if you just look at deepfakes and what's going on, excuse me, in the news or stuff like that, use of tokenization would fix that, I won't say easily, because it's not that easy, but validation of quotes, of video, things of that nature, can be done through blockchain.

Gavin: Yeah. Well said. Well, as we wrap up, I did want to bring back one thing, Marty, that we spoke about last time, and see if we might have as well. I know community involvement is really important to both you. Marty, we spoke about the Mariner Foundation last time. Any updates on that front? And maybe tying back to COVID and just how the world has changed, anything changed around the mission, the types of support, the type of involvement that you're doing with the foundation, given what's going in the world?

Marty: Yeah. I don't think anything's changed from the mission or the importance of it or the interest level in it from our associates all over the country. I would tell you... I mean, the need for it and the request and the number of people, has just... it's exploded. And the coolest thing from my perspective, being part of this organization is that the number of people that want to impact with time... I mean, impacting with dollars is one thing, and it's needed, and it's important, but for individuals willing to invest their own time and energy in trying to do good is something that I'm extremely proud of. 

Gavin, It's been great.

Steve: Yep, thanks for having us.

Gavin: Steve, Marty, really appreciate the time. Exciting days ahead. Only a few weeks into the announcement. Can't wait to see where you guys go together.

Steve: Probably golfing. But looking forward to what we do in wealth management.

Marty: Thank you.

Steve: Thanks.

Gavin: Thanks, guys.

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