Participants:
Steve Wershing
Julie Littlechild
Dan Sullivan
Steve:
Welcome to Becoming Referable, the podcast that shows you how to become the kind of advisor people can’t stop talking about. I’m Steve Wershing. In this episode, we talk with Dan Sullivan, Executive Vice President of Cambridge Investment Research. Dan joined the senior management of Cambridge with 30 years’ experience as a financial advisor. He now focuses on leading strategic initiatives that support advisors in efficiently growing their independent businesses.
We talk with Dan about developing a niche that reflects your authentic self, how building on your skills and passions serving a population with meaning to you helps you convey the excitement you have about what you do. He describes the importance of developing the next generation of advisor in your business from both a continuity and a marketing point of view.
And we talk about how the financial service business has evolved, raising the significance of expanding your value proposition and being more articulate about your desire to help clients accomplish their goals. Dan has been there and done that. In addition to working with thousands of advisors, he can share with us his experience of having a successful business transition to the next generation of advisors. Please enjoy our conversation with Dan Sullivan.
Dan Sullivan, thanks for joining us on the Becoming Referable Podcast.
Dan:
Good afternoon. Great to be here.
Steve:
Now you are one of the top couple executives at Cambridge Investment Research, one of the most successful independent broker/dealers, but your background is as an advisor working directly with clients. Can you tell us a little bit about the path that you took and how you got … maybe even how you got into the business and then eventually how you got over into the broker/dealer management role?
Dan:
I’d love to. The business is always about a bunch of things. It’s about the relationships you develop throughout your career and it’s also about right place, right time, or in the right place at the right time, however you want to phrase that. I think that has been the evolution of a lot of individuals as they go through their life cycle. I got into the business as an accident myself.
I graduated college with a science degree and science degrees were not paying a whole lot. I had started a family, so I eventually ran into a friend who was in the financial services industry. Convinced me it was the greatest career ever and the rest is history from the beginning, so it was the right place at the right time to be open to the consideration.
I guess as time progressed, I did that for many years and an opportunity … you create relationships with friends, obviously. Some of my greatest friends through the years have been advisors that I’ve met and have been with. One of those people’s name was Jim Guy, who had moved over to Cambridge probably about five or six years before me and eventually took a management role himself.
We remained very close friends and spent a lot of time together. I could see his excitement and rejuvenation of doing something different than just being an advisor himself. Then all of a sudden, I get a call one holiday morning and he said, “I got a business proposition to discuss with you.” It was typical to many kind of business conversations. It had nothing to do with me, it just had to do with a business question.
The question was, “What do you think if you’d come to spend some time with the executive board at Cambridge?” Again, it was one of those times in my career, I’d been in the career a long time and it was a transition period. I had already started to, what I called, institutionalized my book of business.
I could have, either transition it or have more time myself to do things that were more flexible than being the relationship to everyone and every one of my clients. It was a little bit of right timing on that side and it was a lot of intrigue on the other side. The intrigue was I had never done anything different in my life other than starting right out of college into the financial services.
The intrigue was always, what it would have been like if I did something different? Not understanding what that would really portray, but I was staying at least in a career path that I was, at least from a field perspective, knowledgeable and had had some success but certainly from a business perspective, was going to look at it in a totally different light.
It was a little bit both times, right place, right time, and I think it was, again, seeded in a relationship that went back about 30 years of friendship. Interesting enough, our CEO and president now had her origin at the same firm Jim and I did as well. There again is the connection that ties the balance of things together.
Steve:
You’ve just partially answered this. When you got that call from Jim on that holiday morning, how long had you been in the business?
Dan:
Jim?
Steve:
Yeah.
Dan:
Jim had been in the business probably about … How long I’d been in the business, I’d been in the business about 30-some years at that particular point in time.
Steve:
Oh, okay. When you say you had already started institutionalizing relationships and that kind of thing, tell us a little bit more about what you mean by that.
Dan:
One of the things is as my practice matured and became a reasonably decent-sized practice, one thing we recognized or I recognized is I couldn’t be everything in all relationships, all my situations. What I wanted was it to become, the relationship to become the firm’s relationship as opposed to Dan Sullivan’s relationship.
As it becomes the firm’s relationship, we had at one point probably about 15 employees and members of the firm all playing a unique role that actually served the clients far better than I did in some situations. There was no reason for them to be calling me to be referred to someone else to either work on a specific piece of their relationship or even the administrative side of it.
I think that was the big thing is trying to move away from my need to be all things in that relationship as opposed to the firm becoming all things in that relationship. It also would give me more time to eventually spend away from the firm not even thinking about the attitude of taking on a different role within the industry, but probably more semi-retirement or things of that nature, which was probably more in the vision before this opportunity came up.
Julie:
It’s interesting. How much of your own journey and the lessons that you learned about institutionalizing those relationships do you now bring to relationships with advisors and the advice that you give them?
Dan:
I try to instill that in them for a number of reasons. One is I think it gives them the opportunity to show some depth and breadth to their organization. One is it’s not just about them, which is also one of the concerns you have when you’re a siloed or a soloed situation is people often desire to make sure that if something did happen to you, there is competency behind you.
There’s, if not a complete leadership team behind you but certainly the relationship there that takes that forward. I think it also establishes a little bit of the generational element of this. Obviously I’ve been in the business a long time which means that, as I’ve continued to age as everyone does, the older you get, the more challenging it gets to bring on new relationships that are younger.
Let’s say I’m 65 or 70 years old and the ideal clients are in their early 50s. Those people are looking for someone that they want to line up with for the next 10, 20 years. If I’m 70, there’s a real challenge that 70 is going to be there with the energy I have at that time for the next 10 or 20 years. So that team effect or that next generation effect also brings in that element of the continuity that this business is a business, not just a name, an individual name.
Steve:
Let’s get back to your story. What was the topic that Jim wanted you to come in and talk with the executive team about?
Dan:
If you know Cambridge’s story, this was about 12, 13 years ago, was continuing growth. It was at an earlier stage in their organization and they were looking to expand the executive team. The one thing that they desired to expand to was someone that was coming out of the field. Jim came out of the field at the time … that if I came aboard, we’d have two of the five senior execs that had actually spent the bulk of their careers as advisors as opposed to the bulk of their careers as coming up through the corporate entity.
That I think was the genesis of how Eric ran the firm was “It’s not about what I want to build, but I want to build what the advisors want.” From that perspective having advisors on the executive team, he felt there was a connectivity to the advisors that would be subtly different than if we hadn’t spent time in the field.
Jim and I also had totally differing backgrounds. He did a lot of the investment management, financial planning. I was probably more focused on the employee benefits and corporate planning and corporate executive planning. We both had backgrounds that would be able to instill in what Cambridge did or what Cambridge was trying to bring to the table for advisors that worked in multiple arenas.
Steve:
Oh, okay. Great. Dan, when you and I spoke about referrals and what kinds of things we would want advisors to know about, one of the things that you spoke about was the importance of niche and how important it is that a niche that an advisor develops reflects themselves, reflects their own interests and passions and those kinds of things. Can you elaborate a little bit on that idea?
Dan:
Sure. One of the things I visually saw when I was early in my business is people who were highly successful tended, gradually had a focus or what I would call a niche. I’ll call it more of a focus that they’re noted for than perhaps the only thing they do. When they develop that niche, the one thing I always have is you have a great passion toward it. It’s usually the thing that drew you to the top, you’ve focused on, you enjoy the most.
The more you enjoy something, the more it conveys the fact of how excited you are and that energy conveys into the thing. The big thing about a niche also is it’s a separator. You become known as being knowledgeable or perhaps the go-to person in any number of different places. In my career, I had as I said employee benefits and one of them was retirement plans, as an example.
Even other advisors would come to me if it wasn’t some core value proposition they had and you did a lot of joint work so you got recognized for that element of it. That transcends into your confidence and also into other centers of influence whether they’re professional or industry-wide. From an industry perspective, it often led me to being a speaker or being involved in trades or areas where they would bring someone in that would focus or be on a panel relative to that.
It becomes an awareness and it’s a very subtle way of becoming, I guess, getting referrals or being set into a place where people are confident when you talk about it or when those opportunities, the right time, to evaluate those, you’ve positioned yourself almost without asking for an opportunity to discuss that with the people you know.
Julie:
I would love to talk a bit more about some of the detail of that. Before I even get into that, you talk about a niche that is about being yourself. Can you give us some specific examples of advisors who had a niche that really did reflect who they were and maybe even ideally, some that didn’t where there was a conflict between those two things?
Dan:
I think there’s a couple of things here. When I said being yourself too, what I mean when I learned early in the business was a lot of times you come in and people train you. I started when training was at its epitome 40, 50 years ago. They’d come in and they’d lay out a path for you that was very defined and you would almost memorize that path or be led into this is what you should be doing.
Two things happened that caused transformation. One is when I either could personalize that path and not try to be a, I would say, like a mini-me. Follow in the tracks, do what I do and you’ll be successful. It created, put my personality into it, my passion into it was when it took hold and went forward.
A little bit of that element of the personalization or a thing there. The second piece there is it also lets you be yourself. You need to be very relaxed and comfortable. If you’re outside your comfort zone or you’re trying to be something you’re not, it really doesn’t convey very well and I think that was it. Relaxing, accepting who you’re at, and finding, customizing your personality to where you’re going forward with.
Julie:
How much of that do you think comes with maturity? I know I’ve found personally that I became more of myself, my work was more about who I was the older I got.
Dan:
There’s no question that maturity brings comfort with that. Again, at the beginning point, it’s the awkwardness of not being who you were trying to convey … The most successful people might be dynamic, they might be a variety of things that no matter how hard you try to emulate, you’ll look more awkward than you’ll look comfortable doing it. I think it was more the acceptance.
Not necessarily changing the track or the story or the things, but personalizing it into your own, the chemistry of your own personality as opposed to the personality of who was usually training you. If you’ve ever had trainers, they’re usually the most dynamic and the most energetic people. It’s hard to emulate them in the way they sometimes use that same … come across the same way.
Julie:
Right. There’s being yourself in personality and how you show up and then also in working with an ideal client that’s a real reflection of your passion. Is that right?
Dan:
The passion and the ideal client, your passion always come across. You’ll deal better with certain types of clients based upon who you are without any question. At the same time, I think people if they recognize you have a passion for what you have and they’re there to get the value that you can define as your value proposition to what you deliver, the personalities are key for long term relationships.
They also, the initial stages set your credibility differently than if you were not comfortable with your doing or a little more awkward or not as confident or passionate about your business. Passion of what you do I think is the most important thing in the excitement that you convey, which does come across when you share your passion and the energy you have about something.
Steve:
Dan, help me resolve this, I don’t want to say a conundrum, but this potential conflict. We know that what you’re saying is that to find the right niche for yourself, to connect with the right folks, that you need to be comfortable with what you’re doing and comfortable with what you’re proposing to folks. On the other hand, we all know as people who have trained and coached along other people is that growth only happens once you get out of your comfort zone. How would you reconcile those two ideas?
Dan:
That’s a good point. I think when you’re pushing yourself to go to the next level, you are challenging yourself in a different way than I’m talking about with not being yourself. I think there you’re challenging yourself to look at things that perhaps you hadn’t considered or to take on the opportunities that open the door where you might be in a comfort zone and you don’t press yourself to continue for that growth.
I think they’re subtly different on that aspect. The challenging and the growth for building a business is more taking the business risk and making sure you’re making good decisions on how to run your business and what areas to expand your business into. I believe that may be what you’re asking there.
Steve:
Okay. Great. Now you talked about being comfortable with who you are and being passionate about what it is that you do. Tell us a little bit about how that translates into the personal connection that an advisor can develop with clients and how they translate that into how they communicate what they do.
Dan:
I think it’s more intrinsic to people recognizing or sensing you have a passion about what you’re doing. If you have a passion, you come across sincere and you have total belief in what you’re doing. That gets conveyed and understood quite well I think just from an emotional perspective.
What it conveys to the clients I think is that confidence that indeed, you’re looking at the best interest of them. They develop that trust in you. That’s the relationship building piece is over a period of time, it’s that confidence and trust that the advisor is instilling in what he’s done and continues to do for those people or his clients.
The other big thing there is it also instills the fact that … if we’re looking for the growth of the business or pushing the business forward is that the more your clients believe in you and trust in you, the more apt they are to want other people to be more proud of who they’re working with and bring more clients to yourself as an option for other relationships that they have as you’re trying to expand your practice.
Julie:
I can see how that’s … it will lead into a great referral discussion. I’d love to also clarify. When you talk about personal connection, when you talk about trust, there’s an element of who you are and how you show up and your intention and what not that feeds into that. Do you also see or recommend that advisors communicate or do certain things to help bolster trust and connection?
Dan:
Could you clarify a little bit on that? Are you talking about things, other things they do with their clients or for their clients?
Julie:
Yeah. Just really quickly, I remember talking many years ago to an advisor. He was an extremely strong producer and I said, “What do you think sets you apart?” He said, “Well, I think my clients trust me.” I said, “Well, I think that’s probably true for a lot. How? Why? What do you do?”
He, without realizing it, began to talk me through a process of the communications that went out. There’s a tactic and process and structure behind everything that he did that at the end of it, I thought, “Well, that’s why they trust you because you do what you say you’re going to do. You’ve got a process.” It’s more than just a feeling, if you know what I mean.
Dan:
Okay. I do understand where you’re going now. That is exactly right. I think the, as I said, when we developed a team or at least in my group or any team, whether it’s a small group or a reasonable-sized group, needs to be part of the whole experience. That experience needs to be, I guess, somewhat simple, memorable, that the clients understand what they’re doing. It’s transferrable between all of the people.
It doesn’t matter who you’re talking to within the team, within my team, we’re all same passion. We’re all same excitement that conveys on to that confidence. It’s also repeatable. I think that is the biggest thing. There’s a process there that happens the same way every time such that it becomes so embedded in your personalities or so embedded in how you do things that it creates a culture to the little firm that these people recognize.
They see it, sense it no matter who they’re dealing with within that organization. I think it also draws them into it. They become part of it. If everybody, if the culture is the same, people feel like you’re drawn into that element as opposed to being fragmented out there and not sure how to connect.
Now that creates not just the trust, but the confidence and the enjoyment. I think most advisors will say, and I used that word when we started ‘relationships’, over the years, some of my best friends were people that I had, didn’t know and had as clients. I think you expand that relationship beyond just the day-to-day element of the business of the financial planning element of it.
It goes into every aspect of what they’re doing. We’re a solution to what their needs are, as to what they’re looking for us. Solve what I’m concerned about, whether it’s a college education for my kids or whatever. They know that they’re trusting us to prioritize to some degree or help them prioritize the most important things in their lives.
Julie:
Great. Thank you.
Steve:
Dan, how does that help an advisor differentiate themselves from another advisor? I get the passion will help develop that personal connection. How do we then carry that over into differentiation?
Dan:
Again, I think it’s the connectivity that you create. It’s the relationship that they see. Now you can create relationships a complete number way. But I look at the advisors as a solution as opposed to what is concerning with the clients that they’re dealing with. A solution is one who is actually listing or has a process to first identify that element in the conversation and then move forward with assisting them in the path that they’re going as opposed to perhaps having every client have …
The process is the same, the results are so customized or so personalized from the client’s perspective that the sense is “This is about me, not about you.” The development is a discussion about “Here is the solution for your concerns”, not “Here is the investment results that I can deliver to you because I’m the best investment manager” or something of that nature.
Steve:
Okay. Now you are at the top of an organization that has thousands of advisors associated with it, so you’re in a unique position to see what’s going on. What are some of the things that you’ve seen that have changed the most in the last few years that affect how an advisor communicates what we’ve been talking about?
Dan:
I think that is one of the things that we’re in transition about is being more articulate about what our value proposition is to the clients. I think we refer to ourselves often as investment managers, a variety of things maybe similar to that, but we’re far more than that. I think we need to be far more articulate about all the other things we do, the concern over getting them in the right direction.
When we identify we’re just a single mode like “Investment management is what I do”, then I think we’re going to be more conflicted in the future with people that come in such as the robos and other things that are just investment management and however have none of that relationship building things. None of that trust that they’re embedding in the relationship to actually discuss what the solution is as opposed to just having a personalized decision “I want investment management.”
I think it’s the expanding of how we communicate what our value proposition is of which investment management might be 20% to 40% of that relationship as opposed to all the other things we do. Keeping them on track on days like today in the market and not letting them panic and holding them true to the focus on what their concerns are, which is about money, but it’s also about achieving what they want.
Julie:
What do you think, Dan, holds advisors back sometimes from articulating their value in that way? Is it that their identity is tied up purely in investment management? Is it simply a lack of perhaps awareness around some of the messaging? What gets in the way?
Dan:
I think it’s a combination of what … If you think back through the times of history for the last 20, 30, 40 years, there always becomes power phrases that is the next evolution of what is trying to distinguish the new breed or the new offering relative to what’s there. Financial planning was a phrase at one time. There was I’m a financial planner, then I was an investment manager, then I’m different things.
I think it’s trying to be relevant to what is getting the current marketing push or if there’s a new phrase, you try to catch onto it such that you aren’t left behind in some case. I think we’re sometimes our own worst enemy. At the same time, I usually reflect back and I usually ask the people that have been in the business 10, 20, 30 years, “Are you offering anything different? Is your relationship changed?”
Typically your relationship with the client has not changed at all. The tools, the technology, the products have all changed, but the value to that relationship is still consistent no matter what you call it. I think we sometimes get hung up on boxing ourselves in, in calling it something and then it isn’t back to the more holistic big picture.
Julie:
Right.
Steve:
This sort of relates to that. What do you think are either the things that no longer work that used to work or what are some of the biggest myths that are out there in terms of predicting your image and trying to connect with new people?
Dan:
I don’t know if anything doesn’t work anymore, but I think it’s maybe a little bit what you’re saying the myths using the same phrases I have just been using. It’s not all about the investment results, it’s all about the solutions that you’re bringing to the table. The investment results will be a piece of what happens there, but it’s the solution that they’re concerned about more so than the investment result.
I think if you can keep them focused on what their needs and the client’s needs and solutions are or the needs that they’ve identified and the fact they’re working on the solutions and how you’ve positioned them, the solution is there. I think it’s not trying to identify that I can pick out the best funds, I can be the best manager. It’s more “Did I match up your needs with what is available within the industry to solve, make you feel comfortable moving forward?”
Steve:
Okay. Dan, you’re on the broker/dealer side of the business. Obviously, there are a lot of things going on there, a lot of changes happening over there. What do you see as some of the, maybe the one or the couple biggest changes that are likely to happen in the next 5 or 10 years?
Dan:
Obviously, things will continue to move forward. While I work for an independent broker/dealer, it should be clear that we’re both a dually registered, we’re an RIA and a broker/dealer. Interesting enough, our firm for the last 12 years has had greater revenue on the RIA side than the broker/dealer side every year. I think it is the evolution of probably exactly what that means is the momentum is growing on the advice side of the equation, which I was trying to instill I think in some of the other comments I made.
I think the evolution will continue to move with technology. Technology is the biggest driver out there right now relative to where the industry is going to go. Everything from just single sign on, doing everything to what will probably not be that far out, as I understand, the artificial intelligence to call up Watson and ask him almost any question about any investment or even from a home office perspective, find out what forms are needed to process any kind of business.
I think the biggest change will be in technology. What I don’t see changing is the connectivity or the loss of the relationship that will keep these people emotionally stable when things don’t go the way they anticipated. It’s the unknown. The market takes the next major correction, it’s the confidence you’ll have not in artificial intelligence, but probably in that psychology or the work that the advisor’s doing to keep the person centered for not making the wrong decisions at the wrong time.
I think while there will be change, they’ll be back to that center of the role that I play or any other advisor plays will still be that stabilizing effect to keep them focused and not making the wrong decisions emotionally. That’s the other thing is you’re helping them manage their emotions, not just their investments.
Steve:
Do you think that the whole discussion about fiduciary and what rules there are around that are going to be, are going to mean big changes in the industry? Or do you think that’s going to end up being anti-climactic?
Dan:
I think it’s already impacted us tremendously. I think it’s made an awareness of what fiduciary is. I think fiduciary is, whether it’s fiduciary acting in the best interest of the client, I think fiduciary creates a perpetual deal. I think that becomes a discussion of … and I think you’ve seen that swing a little bit both ways here recently too is everything should have been fiduciary.
That’s why the DOL was pushing the elements they’re trying to push and everybody needed to act almost on an advisory basis as opposed to a transaction basis. Of course as things settled in, you get some pushback from a counterpoint saying today maybe everything shouldn’t be if it’s a single transaction or certain things maybe shouldn’t have ongoing fees structure connected to them.
I think there’ll be a better balance as we come out of this. I think it’s always acting in the best interest of the client and trying to quantify how that plays out from an economic perspective I think is just secondary to making the right decision based upon what services you’re offering in that particular situation.
Steve:
Okay, great. Dan, our time is just about up here and we really appreciate your joining us to discuss these things with us. Any last thoughts you wanted to leave our listeners with before we sign off?
Dan:
It’s a great industry. As I said earlier, it’s going to change. I think it’s been changing. If you think back 10, 20, 30 years, the business never looked like it looked like in the past. No matter where this current change is taking us, it’ll change again and again as we move forward. Again, I don’t believe it’ll ever go away, so hang in there and believe in it. I think it’s one of the most rewarding careers that anyone could ever have.
Julie:
Absolutely. Well said.
Steve:
Yeah, Dan. Thanks so much for joining us on the podcast today. We really appreciate your time.
Julie:
Thank you.
Hi, it’s Julie again. It was great to have you with us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes. It really does help. You can get all the links, show notes, and other tidbits from these episodes at BecomingReferable.com. You can also get our free report ‘Three Referral Myths That Limit Your Growth’ and connect with our blogs and other resources. Thanks so much for joining us.