September 29, 2025 • 33 mins
What’s the one operational mistake that can quietly erode margins and stall growth? For Matt Sonnen, COO of Coldstream Wealth Management and creator of The COO Society, it’s misinterpreting fiduciary duty, a trap that leads RIAs to overserve clients at the expense of profitability.
In this episode, host Kelly Waltrich sits down with Matt to unpack lessons from his career as a COO and consultant to advisory firms. They dive into the realities of running a scalable, profitable RIA, from client segmentation and cost-to-serve to building processes before buying technology to managing change through mergers and acquisitions.
Drawing on years of experience helping firms standardize operations, Matt shares why profitability should matter just as much as growth, how COOs can earn buy-in from advisors, and why the emotional side of M&A often gets overlooked. Most importantly, he reframes fiduciary duty for modern firms: putting clients first doesn’t mean giving away every premium service to every client. It means eliminating conflicts, being transparent, and protecting the long-term health of both the client and the firm.
This conversation is filled with practical insights for leaders who want to scale without losing control of their operations, profitability, or culture.
Kelly and Matt cover:
00:00 – The COO’s role in driving communication and alignment
02:15 – Why profitability matters more than revenue growth
05:32 – Fidelity’s $9,222 “cost to serve” benchmark and what it means for segmentation
08:47 – How overserving small accounts can erode margins and capacity
12:05 – Why process must come before technology investments
15:42 – Common operational gaps exposed in M&A integrations
19:30 – Standardizing systems vs. flexibility in planning tools
22:18 – Managing the emotional side of selling a firm
25:54 – Building guardrails around advisor pricing and discounting
28:36 – Reframing fiduciary duty: eliminating conflicts, not overserving
30:12 – Matt’s “Don’t Do That”: Don’t misinterpret your fiduciary responsibility
32:40 – Final advice on scaling profitably without sacrificing client experience
About Our Guest:
Matt Sonnen has over 25 years of experience in the financial services industry. As Chief Operating Officer, Matt manages all aspects of Coldstream’s operational platforms to identify opportunities to scale and systematize processes ensuring capacity for the firm’s continued growth. In addition, Matt will also oversee the firm’s Information Technology, Performance Reporting, Client Service, and CRM efforts.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Matt Sonnen (00:00):
Everyone that pictures the COO you think of a
nerdy guy with a pocketprotector in the in the back
room somewhere. Communication iskey to success in the role, if I
get pushed back all the time,but if I can communicate why
we're doing something a certainway, or why it's important, why
we can't offer that service atthat cost, whatever, if you can
back it up with numbers, if youcan explain yourself clearly and
(00:24):
concisely, most of the time,advisors and RIA owners, they
say, Yep, okay, I get it. I getI don't like it, but I but I
understand.
Kelly Waltrich (00:35):
Welcome to the Don't Do That podcast. I'm Kelly
Waltrich, CEO and Co-Founder ofIntention.ly. And like me, this
show is no fluff and no BS, justsmart advice to help you learn
from the best and level upfaster. So what are we not doing
today? Let's find out. Hieveryone, and welcome to the
(00:55):
Don't Do That podcast. I'm yourhost, Kelly Waltrich, and today
I have with me, Matt Sonnen, theCOO of Coldstream. What's up?
Matt, thanks for joining
Matt Sonnen (01:03):
me. Thanks for having me. This is fun. Yeah.
Kelly Waltrich (01:07):
Okay, so guys, a little bit of backdrop
information here. We atIntention.ly host a CMO
Collective. A lot of you knowthat we host it at Future Proof.
We host it at all the WealthManagement EDGE events. They're
a little bit different in theway that we go about them at
different events, but we'retrying to cultivate a large cmo
community to share ideas andthoughts. Well, you also know
(01:30):
that Randy Lambert joinedIntention.ly to build out our
COO division of our business,and so we this week, are hosting
our first ever COO Roundtable,which is why Matt is actually in
Philadelphia. I can see him.
He's sitting across the way tojoin us because he happens to be
the OG of the COO roundtablesand The COO Society. So Matt
(01:52):
tell us a little bit about aboutthat and how it originated, and
what that looks like today.
Matt Sonnen (01:58):
So I first had the podcast COO Roundtable. We're
coming up January. Will be sevenyears, and I do it once a month.
That's all I could commit to.
And so we're coming up on almost80 episodes of the COO
Roundtable, where I interviewCOOs, just to talk about what
they do from a day to day. Iwanted to gain some exposure for
COOs. Every industry is salesdriven, but our industry
(02:21):
especially is very sales driven.
So that was why I've wanted todo the podcast. And then after
doing that for a while, Icreated COO Society, which is
online courses. I hired aninstructional systems designer
and would hand him my scripts,and he created them. He created
cartoons to go through how toget the most out of your CRM, or
(02:43):
should your service teams becentralized? Or do you want each
advisor to have their ownservice team? We've got how to
write a job description,courses, etc. So COO Society and
COO Roundtable, they'reseparate, but they're they're
very much intertwined.
Kelly Waltrich (02:58):
Very cool, very cool. Well, hopefully they can
become intertwined with our COOCollective. After today we nail
this All right, so you'vecultivated this audience, this
group, this community of COOs,and it's funny, community is
having its moment. I think it'snever been more important to be
creating communities, to to bebringing people together. I
(03:20):
think AI is pushing peopletowards that more and more. Tell
me a little bit about, you know,for me, for Don't Do That, I've
learned so much. I'm sure it'sthe same for you as you're
interviewing these folks foryour podcast. Give me a little
bit of insight into some of thethings that you've learned from
the folks that you'veinterviewed and and why you've
continued doing it through 80episodes. Yeah, the
Matt Sonnen (03:40):
listeners, they tell me, they get two things out
of it. It's, it's, how arepeople dealing with the same
challenges I'm dealing with? Andthen the the other one, which is
probably more important, is theyget to say, Oh, I'm not crazy.
COO's role is, is sometimeslonely. You're the the kind of
the business person in the roomfilled with a bunch of, like I
said, sales people. Salespeople, by definition, have to
(04:03):
be very optimistic, so theynever see the downside of
anything. And so it's usuallythe COO that has to raise their
hand and say, Hey, are we surewe want to do this now? Are we
sure we can do this now? Etcetera. So they like hearing the
stories of other coos that arestruggling with these same
challenges. And then I think itgives them confidence to go back
into their firms and push backand say, No, I'm not crazy,
(04:23):
because other people are comingto the same conclusions that I
am.
Kelly Waltrich (04:26):
Yeah, that's so true. Okay, so a little bit of
info. So Matt and I, for all youlisteners out there, Matt and I,
we've been LinkedIn friends fora long time, but we just met in
person today, as he rolled intoour King Prussia office here.
And Matt, maybe something youdon't know about me is that my
hubs run is the COO of a verylarge RIA here on the main line.
So I've I feel the pain withoutbeing in the role, I'm sure, as
(04:52):
maybe your wife does too. So ourdinner conversations are very
probably much about the thingsthat you are talking to your
your podcast guests on aregular. Basis. I'm sure you're
all thinking that's soenthralling that this, these are
the things that we talk about.
But give me a sense of like,what do you think the biggest
challenges coos are dealing withright now? You yourself in your
own business, or just ingeneral, like, what do you think
is looming over the heads of theCOOs in our space today?
Matt Sonnen (05:18):
I think it's the same problem over and over
again, which is all RIA owners.
Maybe it was 25 years ago, butthey all came from the wirehouse
world. And in the wirehouseworld, when you got started,
they posted your sales numbersevery month, every quarter,
whatever it was in the office.
And so RIA owners only focus onrevenue, and they don't always
(05:41):
think about profitability, yeah,so it's the COO again, that has
to be the adult in the room andsay, great, you want to bring in
every single client, but are yousure these are clients that we
can, we can service profitably?
And so I think that's, that'sthe biggest challenge, is just
that focus on profitabilityversus revenue. And there's just
always that rub.
Kelly Waltrich (06:02):
So how do you approach that in your firm?
So, yeah, Coldstream, where I'mthe COO. Now I've been the COO
for about two and a half years.
We are growing both organicallyand inorganically. I joined two
and a half years ago. We wereabout six and a half billion of
AUM. We're now 13. We werearound 100 120 employees. We're
now 230 employees. We have eightdifferent offices. So there's a
(06:23):
lot going on. Loving it everyday, because there's so much
going on. But yeah, especiallywhen you're growing in
organically, everybody's kind ofgot their own niche, their own
client, ideal client, and whenthey're joining, trying to put
them all under, under one roof,is challenging. So that's,
that's what I'm focused on everysingle day. Is just trying to
figure out what, you know, wecall it the Coldstream way. And
(06:44):
how do you get everybody acrossall these different firms that
are coming in under the coldstream umbrella, how do we get
them to start adopting the coldstream way?
Got it. So what does that looklike? Is that segmentation? Is
that different service models?
Is that, how do you how do youswing it? I think, I think that
so many firms right now aregrowing in organically, and this
(07:06):
is a challenge across all ofthem, and I think they all
probably have this question. Solike, what do you do?
Matt Sonnen (07:14):
We get them onto our technology fairly quickly. I
mean, I say fairly it stilltakes a year, maybe, maybe even
sort of the nuclear option. Youif that is going to be the way
longer. You can only move onesystem at a time, but they're
using one reporting system andwe're using another. Okay, we're
going to move them over there.
They're using a different CRMthan we are. We're going to get
(07:36):
them onto our CRM so the techcan get implemented relatively
quickly. And then it's theprocess that is the hard part,
and getting everyone just toopen accounts the same way, get
advisors to service clients inthe same way. And like you
mentioned, the big word isclient segmentation and figuring
out at different levels ofclients, what is that service
offering and sticking to it.
(10:43):
to just get people to into themindset of process is just,
let's just rip this out, put anew one in, and then implement
good processes around it as partof the tech implementation. That
that will work, for sure, but itreally wasn't necessarily that,
right? A par is better thanTamarack is better than Black
Diamond. You know, whateverit's, when you implemented the
(11:04):
new one, you put in good processaround it.
Yes, for sure. Okay, so I amalways curious how CEOs of
organizations that are acquiringbusinesses think about building
their tech stack. So are you ofthe mindset that you're giving
folks any kind of choice, or isit here is the tech stack, and
you come on to all of the toolsthat we have internally, and how
(11:27):
does that play out in terms ofthe conversations you have with
firms?
Again, we'll be a little morelenient on process and what type
of client they're going after,but no, I think you're really
gonna drive yourself nuts ifyou've got three performance
reporting tools, which means youhave three billing systems,
which means you have threeclient portals. The only system
(11:49):
that I just can't narrow down toone is financial planning,
planning. I figured you weregonna say that, yep, they just
it's almost a religiousconversation. I was on that
system before, and I went tothis one, and it's better, and I
refuse to so that one, we dohave multiple planning tools,
but everything else, we've gotone CRM, we have one performance
reporting tool, one portal forclients, and then we will allow
(12:12):
some flexibility around process.
But I think you're asking for alot of trouble if you're going
to allow as as teams join you,if you're going to allow them to
keep their their tech,Their tech. Yeah, no, that makes
a lot of sense. It's so funnythat you say that financial
planning is a religion. I'm, youknow, I was a CMO of eMoney for
right, many years, and I feltthat, like, I felt like people,
it was like, I'm not going tosay the word cold, because it's
(12:35):
not that, but it's like, just apure love for all things
financial planning and thetechnology along with it, which
is awesome. It was an awesomeseat to be in, because you want
brand ambassadors. You wantpeople who love the technology.
But it was like nothing I'veever seen for sure. Yeah,
absolutely. And okay, so you areacquiring businesses, moving
(12:58):
people to your tech stacks,implementing strong processes.
What are the biggest holes thatyou have to look out for? Like,
what do you what do you braceyourself for every time you
bring on a new firm?
Just changemanagement in general, right? It
doesn't matter what it you neverknow what the exact sticking
point is going to be. Thank GodI haven't had to deal with this
(13:20):
at Coldstream, but in myconsulting days, I did do a lot
of, hey, we just acquiredsomeone. Can you come in here as
a consultant and help usintegrate the businesses? I had
one advisor, so he was at XYZadvisors. He sold to ABC
advisors, and for some reason,he thought he was going to keep
his at XYZ advisors.com, emailaddress, and through a
(13:41):
conniption fit that is no onetold me my email address was
going to change. And it's thatbusiness doesn't exist anymore.
You sold the business like youfiled your ADV W it's not around
anymore. Why wouldn't you havethought you were taking on but
you never know what the stickingpoint is going to be. I won't.
I'm not going to change myfinancial planning tool. I'm
(14:01):
not, you know, or or process, orif there's always something in
there, so you know that there'sgoing to be a sticking point.
You try to uncover that in theearly days of knowing what the
sticking point is going to be.
But it's different for each eachteam, each firm that joins, what
that hang up is going to be.
Kelly Waltrich (14:18):
You know, that's such an interesting point,
because I realized as we weregoing on our acquisitions, briet
Orion that founders don't trulyunderstand the process until you
go through it. Yeah, we saw andit's sometimes hard to go
through gracefully. I look backnow and I think about each of
the acquisitions we did, andwatching each of the founders
(14:40):
sort of process that they'vesold their business, and what
does that mean, and how doesthat affect all their people,
and how does that change the waythey were operating? And I feel
like I got a front row seat to amaster class in that just
through those couple of yearswhere we did a lot of them,
because it is hard. It's a hardthing, and it's hard to watch a
founder make the realizationsof. All the changes that are
(15:00):
happening, because you feel forthem. They built something
great. And I just think it'slike one of those things like
giving birth, where, like, youdon't know exactly what you're
in for until, until the paper issigned.
Matt Sonnen (15:12):
So you have to keep reminding yourself, if you are
at a firm that that has acquiredseveral and you've been through
several, you have to alwaysremind yourself, this is the
first time, and probably theonly time this advisor is going
to go through this. Yeah, and itis so emotional for them.
Kelly Waltrich (15:26):
It is so emotional. I don't know that we
talk this industry doesn'treally talk about that that
much. I think we talk about thechange that happens. We talk a
lot about the technologychanges. But yeah, it is
emotional. And it's, yeah, it's,it's wild. I have a friend who
sold their business, and, youknow, me and my husband went and
sat, I had gone through this,watched Orion do a lot of
(15:47):
acquisitions, and I went out todinner with this person who was
about to sell his business, andwe just said, you know, we just
said, like, have you thoughtabout this? Have you thought
about this? And he was just soconfident, so excited and and
then after the fact, so full ofregret. So it's just one of
those things I don't know. Youhave to truly be prepared, I
(16:08):
think, emotionally, to gothrough it. Yep, absolutely.
All right, Matt, so you knowthat the premise of this podcast
is that we learn better from ourmistakes than our wins, and so
(16:28):
what are we not doing today?
Matt Sonnen (16:30):
So I promise. So now I've learned. So for your
other guests, I should have toldyou what it was, because you've
almost hit it a couple times andI kept trying to steer the
conversation away. That'shilarious. I love it. But what
we are not doing today is we areno longer going to misconstrue
our fiduciary duty to ourclients. So the fiduciary duty
(16:50):
says it's all about conflicts ofinterest. Put your clients
interest ahead of your own.
Eliminate conflicts of interest,where you can reduce conflicts
of interest if you can'teliminate them, and if you can't
eliminate them, you have toeliminate them, you have to
disclose them to your clients sothat they can make informed
decisions. That's what it says.
But over time, advisors havemisconstrued this, and they
(17:11):
think what it says is, if youcan offer a service to a client,
you are obligated to offer thatservice to every one of your
clients, regardless of whatthey're paying you. So it's all
about client segmentation. Yeah,well, if I can for a $20 million
client, if I can do complicatedtax planning, if I can do
complicated estate planning, ifI can give the $20 million
(17:33):
client a customized investmentportfolio, which then is going
to lead to customizedperformance reporting as well,
if I can do all of that, when Ihave a million dollar client who
I've probably cut their fee,they're probably not even paying
me. What my stated minimum is, Ihave an obligation, because I
know how to do all of thesereally complicated things, I
have an obligation to also offerthat same service to my smaller
(17:56):
clients that are not paying meenough to cover my cost to serve
that client, and they drivetheir margins into the ground.
They drive their people into theground. They get frustrated and
say, why aren't we growing? Idon't understand. I have another
$20 million client, and youpeople are telling me, I can't
we don't have any capacity,because you gummed up the system
with smaller clients that aren'tcovering your cost to serve
(18:19):
them.
Kelly Waltrich (18:20):
Hmm. Okay, so how do you think we got here?
Matt Sonnen (18:24):
I think we got here from they mean, well, I mean,
it's, it's, it's, again, youfeel bad if a client has a need.
You want to give them everythingyou have to offer. So they're
coming at it from an altruisticperspective. But you just,
you've got to put your businesshat on sometimes and realize
that my cost to serve is I justcan't for what this client is
(18:46):
paying me. So Fidelity put ongreat research about a year or
two ago, and I quoted all thetime, they have a national
average that costs $9,222 toserve a household. So that could
be a bunch of accounts, but ahousehold on average, cost you
$9,222 so a lot of RIAs don'tknow how to calculate exactly
(19:07):
how much time they're spendingon every single client across
everybody so I've just tried totell people, just go with that
one rounded up to 10,000 if youwant the client is paying you
less than $10,000 you shouldassume they are unprofitable, or
you just need to serve them. Putthem on a model portfolio. You
rebalance it occasionally. Yougive them the, you know, two to
four meetings a year, by zoom,whatever it is, you've got to
(19:27):
match the service offering towhat they're paying you, or
you're just your margins aregoing to are going to go and
then you keep asking everybody,why aren't we growing? I don't
understand. Why is this so hard?
Why is this so hard?
Kelly Waltrich (19:39):
Okay, so I'm just gonna sympathize for a
second as a business owner,because you want your clients to
win and you want your clients tostay with you, and sometimes
those two things only happen ifyou give them the services they
need versus the services thatthey're paying for. So I get
that. I totally get that. I feellike we do that a lot. So give
(20:02):
me a sense of, like, thebusinesses that you've brought
in to Coldstream, or, like, isthis every RIA has this trouble?
Or what is it? What's thelandscape look like?
Matt Sonnen (20:13):
Yeah, what I hear a lot is, well, I yes, they're too
small now, but I think they'regoing to be big someday. But if
I don't give them all theservices today, when they do get
big, they're going to leavebecause they think we don't have
those services to offer. I hearit and I get it, and like you
said, I sympathize with it. Youjust have to be honest with them
and let them know that, yes, wedo have these services, and we
(20:34):
are providing these services fora number of clients, however you
want to word it, and you got toword it in a nice way, but you
haven't graduated to that levelyet. Or, you know, however,
whatever wording you want to,you want to put around it, but
you need to let them know thatat this price point we offer
these services, you're at thisprice point right now, and
that's this is the services thatthat we can offer you at that
(20:58):
price point. If you want toraise your feed, you want to
give us more assets, whatever itis we can afford to offer those
services to you. But I mean,think of all the car
dealerships, right? You've got awhole line of of cars at
different price points, andsomeone can't come in and say,
I've got money for a Camry, butI want a rolls. Royce, true.
Kelly Waltrich (21:19):
When you put it that like that. It seems quite
ridiculous. You know, what I'mseeing more and more of from
RIAs lately is a lot of them arethere's a lot of apps now these
days that are facilitating aonline Planning and Investment
experience that can be aprecursor to the more hands on
(21:40):
experience. So I have more andmore clients that are testing
that model, which is superinteresting. And then the role
intentionally plays in thatmodel is, can we take a prospect
that wanted, the more handhold,you know, the more custom
service, and put them, get themto buy into the application? Can
we get them to add their dollarsthere? Can we get them to invest
(22:04):
there? And can we graduate themthrough marketing and
communications, which is much ofwhat's driving that. So I think
that's kind of interesting thatso many firms are sort of
dipping their toe into figuringout different models. Do you see
a lot of that? Yeah.
Matt Sonnen (22:17):
And again, everybody sort of uses different
language, on on how they'reexpressing it to clients. But,
yeah, I think you do need toshow them a menu of all the
different things that you haveto offer. But then there should
be some sort of price tagassociated with with that,
whether you're saying that'sunder under an AUM, or it should
be under revenue, or, you know,the fees that they're paying.
(22:38):
But if you, you know, a lot offirms just say, Oh, if you give
us 20 million, we can do this.
If you give us this. If you giveus 10 million, we can do that.
If you give us 5 million, we cando that. Another problem where
they run into though, is theydiscount their fees so much that
even though that it's a $5million Portfolio, they're
actually paying you as ifthey're only, you know, $2
million Portfolio, or whateverit may be. So you that's another
place where ri owners, they lookat the end of the year and they
(23:00):
go, I don't understand how wedon't have any don't have any
money. How is there no earnings?
How is there no cash flow to thebusiness when we brought in all
these new clients, well, youdiscounted your fees drastically
to win the business. You have tobe aware of your cost to serve
your each of your households.
Kelly Waltrich (23:16):
I'm smiling about this because this is a
conversation I just had with myhusband about his firm, because
they're all battle. They're notbattling. They're they're
discussing what their minimumsize is, and his he says exactly
what you know from the voice ofthe COO. He says, it's the fee,
as long as it is, if the fee isthis, it doesn't matter what the
(23:38):
size is. So he and I literallyjust had this conversation, and
actually we talked to a lot offirms about lot of firms about
that, because when we do digitalmarketing, a lot of firms will
come to us and say, hey, it's a$2 million minimum, it's a $5
million minimum, it's a $10million minimum. Can you help me
target clients, and then we'llfind out down the road that it's
actually the fee that they'regoing after, and that's very
reliant on what they end upcharging them. So I can't impact
(24:01):
that, you know, through digitalmarketing. So there's some
interesting things that we try,we try to figure out. But you're
right. I feel like you and myhusband are going to have a
great time chatting today whenhe comes in for the round table,
because a lot of things thatyou're saying are very much
along the lines of our dinnerconversations. Yeah. Okay, so
what we are not doing today fromour friend Matt, here is
Matt Sonnen (24:29):
We are not misconstruing our fiduciary duty
to our clients, or we're notgetting confused about what our
obligation is.
Kelly Waltrich (24:38):
Obligations are.
We are not getting confusedabout what our obligations are
to our clients. Oh my gosh. Doyou think it's sometimes just
not clearly? I feel like allthese rules and regulations are
so unclear. Like, can we can wewrite them more clearly and make
it easier for people tounderstand?
Matt Sonnen (24:56):
Right? Yeah. And again, people are coming at it
from a ultra. Holisticperspective. If I can offer
this, I should, yeah, you just,you've got to have your business
hat on from time to time, andyou have to know what that is
going to cost your firm, all theexceptions, all the
customizations. There is a costto that, people time and people
(25:18):
cost in technology cost, and youjust you have to be aware of
what the client is paying youversus what services you're
offering.
Kelly Waltrich (25:27):
Okay, so I have another question for you then.
So are you going to youradvisors and saying, No, we
can't take that business. Andhow does that play out?
Matt Sonnen (25:36):
So yeah, we have guardrails around at different
segments. What the maximumdiscount they're allowed to
offer a client? Hey, I candiscount your fee by 20% or at
this level, I can discount yourfee by 30% whatever it may be.
If they want to go outside ofthose guardrails, they have to
talk to me and our director ofclient engagement as well and
(25:57):
give us the business pitch ofwhy you're going outside of
those guardrails, and we'll kindof try to coach them on well,
have they actually asked for thediscount? Or, like, is this a
competitive situation? Or whydon't you start with a fee here
and see what they say first. OrI'll say, what services are they
asking for? And you can tellthem if you need the fee here. I
can do the fee, but I got to doless services. Or we can do all
(26:20):
of those services, but I can'tgive you the max discount on on
the fee, so you have to havethat push and pull with the
prospect.
Kelly Waltrich (26:28):
You know, it's funny, I think my husband me
being in towards the sales andmarketing side, and him being
towards the operation side, weboth generally see the opposite
side of it, because I want toget the client in. Wow, them,
get them to take on moreservices. And he's very much
black and white in terms ofwhat's doable. I feel like,
(26:48):
what's the movie where they dothe switch, where they switch
lives for a minute? I feel likethat needs to happen for every
marketing leader and everyoperations leader, because I
think both sides are hard,right? Like it? Yeah, it's, it's
hard to be up againstcompetitors who are cutting
their fees. It's being it's hardto go out against the RIA that
says they're democratizing thefamily office and bringing all
(27:11):
of these extra services to a $2million client. Yeah, there's,
there's competitive pressures,but to your point, on the
operational side, there's alsothe realities of the the
profitability of the business.
So I feel like we need, like weneed like a freaky Friday. Yes,
swap it out. Have the salesleaders become ops leaders. Ops
leaders become sales leaders.
Live in each other's shoes for acouple of weeks, and everybody
(27:33):
come back to the table. I feellike this would all go much more
smoothly.
Matt Sonnen (27:38):
So I ran my consulting business for eight
years. It was a consulting fee.
I had to renegotiate the fee. Itwas, I didn't have a, like a fee
schedule, like a you know,schedule, it was every single
client I got. It was, whatservices do you need? Okay, this
is the fee, and I can lower thefee if I lower this, like I so I
got very good at this, thisconversation, because I had to
do it with every single client,as opposed to our advisors are
(27:59):
just, well, that's the feeschedule, and you just you post
it, and clients, most of thetime, just sign the documents
and they're good with it. Butwhen they do get into these
conversations around, what isthe service versus what is the
fee, it is a tough conversation,but if you're going to put your
business owner hat on, you dohave to be aware of of the cost
to your firm for all of thosedifferent services.
Kelly Waltrich (28:23):
Totally agree. I think that's super interesting.
So a household at $10,000 toserve, yeah, I had not seen that
before, but that is superinteresting.
Matt Sonnen (28:34):
Yeah. And then I tried to tell our team, you
know, we're in the PacificNorthwest. I've said our
employees cost more than thenational average. So you have to
assume our cost deserve ishigher, because our employees
cost more in the Seattle area onthe west coast. So, but I said,
let's just go with the 10,000and we can at least start there.
But yeah, that's, that's thenational average that they come
(28:56):
up with when they're talkingabout technology costs and
people costs all the differentservices you're offering?
Kelly Waltrich (29:01):
Yeah, interesting, very interesting. I
need to do that for my firm.
Yeah, feel like that would besome good information to have.
Okay, so what is your advice forcoos sitting in your seat that
need to navigate thesechallenges and need to help
their advisors understand whatthey are supposed to be
(29:23):
delivering at what cost like,what is the starting point? What
is the framework? How are yougoing to help coos at our round
table today and otherwise kickoff this process for a better
internal alignment on deliveryof services, loaded question, I
know.
Matt Sonnen (29:42):
Yeah, no, it's funny, because everyone that
pictures the COO, you think of anerdy guy with a pocket
protector in the in the backroom somewhere. Communication is
key to success in the role, if Iget pushed back all the time,
but if I can communicate. Whywe're doing something a certain
way, or why it's important, whywe can't offer that service at
(30:04):
that cost, whatever, if you canback it up with numbers, if you
can explain yourself clearly andconcisely most of the time.
Advisors, they RIA owners, theysay, Yep, okay, I get it. I get
I don't like it, but I but Iunderstand. So the key for COOs
is continue to work on in yourcommunication skills. Good old
ChatGPT helps with that. Writean email and throw it in there.
(30:27):
See what it see what it comes upwith. But I've found that most
of the time, if you can do agood job explaining why people
are usually okay with it,they'll they'll come at you guns
a blazing and say, This isunacceptable. But if you can do
a good job explaining whysomething is the way it is, why
your firm does it the way itdoes, you're usually in it can
(30:48):
come to a pretty quickagreement.
Kelly Waltrich (30:50):
It's awesome.
Okay, and I just thought of onemore question. Sorry, I was
going to end, but what happensto all the clients that you
can't take? So I think aboutthis all the time, because we do
digital marketing for firms inour space, and there's always a
minimum, right? There's always athreshold. So do we have hordes
of investors, essentiallyshowing interest to advisors all
across the industry that arejust floating around because
(31:14):
they don't hit a minimum? Likeif someone, if you said, No, we
can't take that business. Wheredoes that person go? Where? What
happens next?
Matt Sonnen (31:25):
I'm want to say, I'm they be. They're just do it
yourselfers, right? And they,they just open a retail account
somewhere, and they're doing itthemselves. I'm sure they, they
shop around. My father is a goodexample, an 85 year old
engineer. He's the worst clientany RIA could imagine. Yeah, he
has shopped and shopped andshopped. He is never happy. He
(31:47):
doesn't understanddiversification and that when
certain parts of your portfolioare going up other. He just
thinks, if I'm paying you Mr. OrMrs. Should all go up. It should
all go up at all times, andthat's what I'm paying you for.
And so he is not a good client,but, and so he is always
shopping, saying, I want this, Iwant that. And he's, he's a do
it yourselfer.
Kelly Waltrich (32:06):
Do it yourselfers. Yeah, I have this,
like, moral I that keeps me upat night, because I think to
myself, like, are we drivinglots of leads to firms who are
never responding to peoplebecause they don't hit minimums,
and ultimately, what should I dowith that? So maybe that's a
conversation that we'll takeoffline. Yeah, all right, Matt,
(32:27):
this has been great. I'm so gladthat you were able to jump on
the pod. I love your don't dothat. I love that you surprised
me with it, and I love thatyou're here in Philly with us
today for the COO Roundtable. Sothank you for all of it.
Matt Sonnen (32:37):
Thank you. This is this is great. Really appreciate
it. Thanks so much.
Kelly Waltrich (32:43):
Thanks so much for tuning in. If you enjoyed
today's show, subscribe to benotified when new episodes
become available, and pleaseconsider giving us a five star
review on Apple or Spotify. Thispodcast is sponsored by
intentionally a financialservices growth engine, design
consultancy and agency. If youwant to learn more, please email
(33:04):
me at Kelly, at growintentionally.com, thank you
again for listening and checkback to hear what we're not
doing next.
Unknown (33:12):
The information covered and posted represents the views
and opinions of the guest anddoes not necessarily represent
the views or opinions of KellyWaltrich, the content has been
made available for informationaland educational purposes only.
Everyone that pictures the COO you think of a
nerdy guy with a pocketprotector in the in the back
room somewhere. Communication iskey to success in the role, if I
get pushed back all the time,but if I can communicate why
we're doing something a certainway, or why it's important, why
we can't offer that service atthat cost, whatever, if you can
back it up with numbers, if youcan explain yourself clearly and
(00:24):
concisely, most of the time,advisors and RIA owners, they
say, Yep, okay, I get it. I getI don't like it, but I but I
understand.
Kelly Waltrich (00:35):
Welcome to the Don't Do That podcast. I'm Kelly
Waltrich, CEO and Co-Founder ofIntention.ly. And like me, this
show is no fluff and no BS, justsmart advice to help you learn
from the best and level upfaster. So what are we not doing
today? Let's find out. Hieveryone, and welcome to the
(00:55):
Don't Do That podcast. I'm yourhost, Kelly Waltrich, and today
I have with me, Matt Sonnen, theCOO of Coldstream. What's up?
Matt, thanks for joining
Matt Sonnen (01:03):
me. Thanks for having me. This is fun. Yeah.
Kelly Waltrich (01:07):
Okay, so guys, a little bit of backdrop
information here. We atIntention.ly host a CMO
Collective. A lot of you knowthat we host it at Future Proof.
We host it at all the WealthManagement EDGE events. They're
a little bit different in theway that we go about them at
different events, but we'retrying to cultivate a large cmo
community to share ideas andthoughts. Well, you also know
(01:30):
that Randy Lambert joinedIntention.ly to build out our
COO division of our business,and so we this week, are hosting
our first ever COO Roundtable,which is why Matt is actually in
Philadelphia. I can see him.
He's sitting across the way tojoin us because he happens to be
the OG of the COO roundtablesand The COO Society. So Matt
(01:52):
tell us a little bit about aboutthat and how it originated, and
what that looks like today.
Matt Sonnen (01:58):
So I first had the podcast COO Roundtable. We're
coming up January. Will be sevenyears, and I do it once a month.
That's all I could commit to.
And so we're coming up on almost80 episodes of the COO
Roundtable, where I interviewCOOs, just to talk about what
they do from a day to day. Iwanted to gain some exposure for
COOs. Every industry is salesdriven, but our industry
(02:21):
especially is very sales driven.
So that was why I've wanted todo the podcast. And then after
doing that for a while, Icreated COO Society, which is
online courses. I hired aninstructional systems designer
and would hand him my scripts,and he created them. He created
cartoons to go through how toget the most out of your CRM, or
(02:43):
should your service teams becentralized? Or do you want each
advisor to have their ownservice team? We've got how to
write a job description,courses, etc. So COO Society and
COO Roundtable, they'reseparate, but they're they're
very much intertwined.
Kelly Waltrich (02:58):
Very cool, very cool. Well, hopefully they can
become intertwined with our COOCollective. After today we nail
this All right, so you'vecultivated this audience, this
group, this community of COOs,and it's funny, community is
having its moment. I think it'snever been more important to be
creating communities, to to bebringing people together. I
(03:20):
think AI is pushing peopletowards that more and more. Tell
me a little bit about, you know,for me, for Don't Do That, I've
learned so much. I'm sure it'sthe same for you as you're
interviewing these folks foryour podcast. Give me a little
bit of insight into some of thethings that you've learned from
the folks that you'veinterviewed and and why you've
continued doing it through 80episodes. Yeah, the
Matt Sonnen (03:40):
listeners, they tell me, they get two things out
of it. It's, it's, how arepeople dealing with the same
challenges I'm dealing with? Andthen the the other one, which is
probably more important, is theyget to say, Oh, I'm not crazy.
COO's role is, is sometimeslonely. You're the the kind of
the business person in the roomfilled with a bunch of, like I
said, sales people. Salespeople, by definition, have to
(04:03):
be very optimistic, so theynever see the downside of
anything. And so it's usuallythe COO that has to raise their
hand and say, Hey, are we surewe want to do this now? Are we
sure we can do this now? Etcetera. So they like hearing the
stories of other coos that arestruggling with these same
challenges. And then I think itgives them confidence to go back
into their firms and push backand say, No, I'm not crazy,
(04:23):
because other people are comingto the same conclusions that I
am.
Kelly Waltrich (04:26):
Yeah, that's so true. Okay, so a little bit of
info. So Matt and I, for all youlisteners out there, Matt and I,
we've been LinkedIn friends fora long time, but we just met in
person today, as he rolled intoour King Prussia office here.
And Matt, maybe something youdon't know about me is that my
hubs run is the COO of a verylarge RIA here on the main line.
So I've I feel the pain withoutbeing in the role, I'm sure, as
(04:52):
maybe your wife does too. So ourdinner conversations are very
probably much about the thingsthat you are talking to your
your podcast guests on aregular. Basis. I'm sure you're
all thinking that's soenthralling that this, these are
the things that we talk about.
But give me a sense of like,what do you think the biggest
challenges coos are dealing withright now? You yourself in your
own business, or just ingeneral, like, what do you think
is looming over the heads of theCOOs in our space today?
Matt Sonnen (05:18):
I think it's the same problem over and over
again, which is all RIA owners.
Maybe it was 25 years ago, butthey all came from the wirehouse
world. And in the wirehouseworld, when you got started,
they posted your sales numbersevery month, every quarter,
whatever it was in the office.
And so RIA owners only focus onrevenue, and they don't always
(05:41):
think about profitability, yeah,so it's the COO again, that has
to be the adult in the room andsay, great, you want to bring in
every single client, but are yousure these are clients that we
can, we can service profitably?
And so I think that's, that'sthe biggest challenge, is just
that focus on profitabilityversus revenue. And there's just
always that rub.
Kelly Waltrich (06:02):
So how do you approach that in your firm?
So, yeah, Coldstream, where I'mthe COO. Now I've been the COO
for about two and a half years.
We are growing both organicallyand inorganically. I joined two
and a half years ago. We wereabout six and a half billion of
AUM. We're now 13. We werearound 100 120 employees. We're
now 230 employees. We have eightdifferent offices. So there's a
(06:23):
lot going on. Loving it everyday, because there's so much
going on. But yeah, especiallywhen you're growing in
organically, everybody's kind ofgot their own niche, their own
client, ideal client, and whenthey're joining, trying to put
them all under, under one roof,is challenging. So that's,
that's what I'm focused on everysingle day. Is just trying to
figure out what, you know, wecall it the Coldstream way. And
(06:44):
how do you get everybody acrossall these different firms that
are coming in under the coldstream umbrella, how do we get
them to start adopting the coldstream way?
Got it. So what does that looklike? Is that segmentation? Is
that different service models?
Is that, how do you how do youswing it? I think, I think that
so many firms right now aregrowing in organically, and this
(07:06):
is a challenge across all ofthem, and I think they all
probably have this question. Solike, what do you do?
Matt Sonnen (07:14):
We get them onto our technology fairly quickly. I
mean, I say fairly it stilltakes a year, maybe, maybe even
sort of the nuclear option. Youif that is going to be the way
longer. You can only move onesystem at a time, but they're
using one reporting system andwe're using another. Okay, we're
going to move them over there.
They're using a different CRMthan we are. We're going to get
(07:36):
them onto our CRM so the techcan get implemented relatively
quickly. And then it's theprocess that is the hard part,
and getting everyone just toopen accounts the same way, get
advisors to service clients inthe same way. And like you
mentioned, the big word isclient segmentation and figuring
out at different levels ofclients, what is that service
offering and sticking to it.
(10:43):
to just get people to into themindset of process is just,
let's just rip this out, put anew one in, and then implement
good processes around it as partof the tech implementation. That
that will work, for sure, but itreally wasn't necessarily that,
right? A par is better thanTamarack is better than Black
Diamond. You know, whateverit's, when you implemented the
(11:04):
new one, you put in good processaround it.
Yes, for sure. Okay, so I amalways curious how CEOs of
organizations that are acquiringbusinesses think about building
their tech stack. So are you ofthe mindset that you're giving
folks any kind of choice, or isit here is the tech stack, and
you come on to all of the toolsthat we have internally, and how
(11:27):
does that play out in terms ofthe conversations you have with
firms?
Again, we'll be a little morelenient on process and what type
of client they're going after,but no, I think you're really
gonna drive yourself nuts ifyou've got three performance
reporting tools, which means youhave three billing systems,
which means you have threeclient portals. The only system
(11:49):
that I just can't narrow down toone is financial planning,
planning. I figured you weregonna say that, yep, they just
it's almost a religiousconversation. I was on that
system before, and I went tothis one, and it's better, and I
refuse to so that one, we dohave multiple planning tools,
but everything else, we've gotone CRM, we have one performance
reporting tool, one portal forclients, and then we will allow
(12:12):
some flexibility around process.
But I think you're asking for alot of trouble if you're going
to allow as as teams join you,if you're going to allow them to
keep their their tech,Their tech. Yeah, no, that makes
a lot of sense. It's so funnythat you say that financial
planning is a religion. I'm, youknow, I was a CMO of eMoney for
right, many years, and I feltthat, like, I felt like people,
it was like, I'm not going tosay the word cold, because it's
(12:35):
not that, but it's like, just apure love for all things
financial planning and thetechnology along with it, which
is awesome. It was an awesomeseat to be in, because you want
brand ambassadors. You wantpeople who love the technology.
But it was like nothing I'veever seen for sure. Yeah,
absolutely. And okay, so you areacquiring businesses, moving
(12:58):
people to your tech stacks,implementing strong processes.
What are the biggest holes thatyou have to look out for? Like,
what do you what do you braceyourself for every time you
bring on a new firm?
Just changemanagement in general, right? It
doesn't matter what it you neverknow what the exact sticking
point is going to be. Thank GodI haven't had to deal with this
(13:20):
at Coldstream, but in myconsulting days, I did do a lot
of, hey, we just acquiredsomeone. Can you come in here as
a consultant and help usintegrate the businesses? I had
one advisor, so he was at XYZadvisors. He sold to ABC
advisors, and for some reason,he thought he was going to keep
his at XYZ advisors.com, emailaddress, and through a
(13:41):
conniption fit that is no onetold me my email address was
going to change. And it's thatbusiness doesn't exist anymore.
You sold the business like youfiled your ADV W it's not around
anymore. Why wouldn't you havethought you were taking on but
you never know what the stickingpoint is going to be. I won't.
I'm not going to change myfinancial planning tool. I'm
(14:01):
not, you know, or or process, orif there's always something in
there, so you know that there'sgoing to be a sticking point.
You try to uncover that in theearly days of knowing what the
sticking point is going to be.
But it's different for each eachteam, each firm that joins, what
that hang up is going to be.
Kelly Waltrich (14:18):
You know, that's such an interesting point,
because I realized as we weregoing on our acquisitions, briet
Orion that founders don't trulyunderstand the process until you
go through it. Yeah, we saw andit's sometimes hard to go
through gracefully. I look backnow and I think about each of
the acquisitions we did, andwatching each of the founders
(14:40):
sort of process that they'vesold their business, and what
does that mean, and how doesthat affect all their people,
and how does that change the waythey were operating? And I feel
like I got a front row seat to amaster class in that just
through those couple of yearswhere we did a lot of them,
because it is hard. It's a hardthing, and it's hard to watch a
founder make the realizationsof. All the changes that are
(15:00):
happening, because you feel forthem. They built something
great. And I just think it'slike one of those things like
giving birth, where, like, youdon't know exactly what you're
in for until, until the paper issigned.
Matt Sonnen (15:12):
So you have to keep reminding yourself, if you are
at a firm that that has acquiredseveral and you've been through
several, you have to alwaysremind yourself, this is the
first time, and probably theonly time this advisor is going
to go through this. Yeah, and itis so emotional for them.
Kelly Waltrich (15:26):
It is so emotional. I don't know that we
talk this industry doesn'treally talk about that that
much. I think we talk about thechange that happens. We talk a
lot about the technologychanges. But yeah, it is
emotional. And it's, yeah, it's,it's wild. I have a friend who
sold their business, and, youknow, me and my husband went and
sat, I had gone through this,watched Orion do a lot of
(15:47):
acquisitions, and I went out todinner with this person who was
about to sell his business, andwe just said, you know, we just
said, like, have you thoughtabout this? Have you thought
about this? And he was just soconfident, so excited and and
then after the fact, so full ofregret. So it's just one of
those things I don't know. Youhave to truly be prepared, I
(16:08):
think, emotionally, to gothrough it. Yep, absolutely.
All right, Matt, so you knowthat the premise of this podcast
is that we learn better from ourmistakes than our wins, and so
(16:28):
what are we not doing today?
Matt Sonnen (16:30):
So I promise. So now I've learned. So for your
other guests, I should have toldyou what it was, because you've
almost hit it a couple times andI kept trying to steer the
conversation away. That'shilarious. I love it. But what
we are not doing today is we areno longer going to misconstrue
our fiduciary duty to ourclients. So the fiduciary duty
(16:50):
says it's all about conflicts ofinterest. Put your clients
interest ahead of your own.
Eliminate conflicts of interest,where you can reduce conflicts
of interest if you can'teliminate them, and if you can't
eliminate them, you have toeliminate them, you have to
disclose them to your clients sothat they can make informed
decisions. That's what it says.
But over time, advisors havemisconstrued this, and they
(17:11):
think what it says is, if youcan offer a service to a client,
you are obligated to offer thatservice to every one of your
clients, regardless of whatthey're paying you. So it's all
about client segmentation. Yeah,well, if I can for a $20 million
client, if I can do complicatedtax planning, if I can do
complicated estate planning, ifI can give the $20 million
(17:33):
client a customized investmentportfolio, which then is going
to lead to customizedperformance reporting as well,
if I can do all of that, when Ihave a million dollar client who
I've probably cut their fee,they're probably not even paying
me. What my stated minimum is, Ihave an obligation, because I
know how to do all of thesereally complicated things, I
have an obligation to also offerthat same service to my smaller
(17:56):
clients that are not paying meenough to cover my cost to serve
that client, and they drivetheir margins into the ground.
They drive their people into theground. They get frustrated and
say, why aren't we growing? Idon't understand. I have another
$20 million client, and youpeople are telling me, I can't
we don't have any capacity,because you gummed up the system
with smaller clients that aren'tcovering your cost to serve
(18:19):
them.
Kelly Waltrich (18:20):
Hmm. Okay, so how do you think we got here?
Matt Sonnen (18:24):
I think we got here from they mean, well, I mean,
it's, it's, it's, again, youfeel bad if a client has a need.
You want to give them everythingyou have to offer. So they're
coming at it from an altruisticperspective. But you just,
you've got to put your businesshat on sometimes and realize
that my cost to serve is I justcan't for what this client is
(18:46):
paying me. So Fidelity put ongreat research about a year or
two ago, and I quoted all thetime, they have a national
average that costs $9,222 toserve a household. So that could
be a bunch of accounts, but ahousehold on average, cost you
$9,222 so a lot of RIAs don'tknow how to calculate exactly
(19:07):
how much time they're spendingon every single client across
everybody so I've just tried totell people, just go with that
one rounded up to 10,000 if youwant the client is paying you
less than $10,000 you shouldassume they are unprofitable, or
you just need to serve them. Putthem on a model portfolio. You
rebalance it occasionally. Yougive them the, you know, two to
four meetings a year, by zoom,whatever it is, you've got to
(19:27):
match the service offering towhat they're paying you, or
you're just your margins aregoing to are going to go and
then you keep asking everybody,why aren't we growing? I don't
understand. Why is this so hard?
Why is this so hard?
Kelly Waltrich (19:39):
Okay, so I'm just gonna sympathize for a
second as a business owner,because you want your clients to
win and you want your clients tostay with you, and sometimes
those two things only happen ifyou give them the services they
need versus the services thatthey're paying for. So I get
that. I totally get that. I feellike we do that a lot. So give
(20:02):
me a sense of, like, thebusinesses that you've brought
in to Coldstream, or, like, isthis every RIA has this trouble?
Or what is it? What's thelandscape look like?
Matt Sonnen (20:13):
Yeah, what I hear a lot is, well, I yes, they're too
small now, but I think they'regoing to be big someday. But if
I don't give them all theservices today, when they do get
big, they're going to leavebecause they think we don't have
those services to offer. I hearit and I get it, and like you
said, I sympathize with it. Youjust have to be honest with them
and let them know that, yes, wedo have these services, and we
(20:34):
are providing these services fora number of clients, however you
want to word it, and you got toword it in a nice way, but you
haven't graduated to that levelyet. Or, you know, however,
whatever wording you want to,you want to put around it, but
you need to let them know thatat this price point we offer
these services, you're at thisprice point right now, and
that's this is the services thatthat we can offer you at that
(20:58):
price point. If you want toraise your feed, you want to
give us more assets, whatever itis we can afford to offer those
services to you. But I mean,think of all the car
dealerships, right? You've got awhole line of of cars at
different price points, andsomeone can't come in and say,
I've got money for a Camry, butI want a rolls. Royce, true.
Kelly Waltrich (21:19):
When you put it that like that. It seems quite
ridiculous. You know, what I'mseeing more and more of from
RIAs lately is a lot of them arethere's a lot of apps now these
days that are facilitating aonline Planning and Investment
experience that can be aprecursor to the more hands on
(21:40):
experience. So I have more andmore clients that are testing
that model, which is superinteresting. And then the role
intentionally plays in thatmodel is, can we take a prospect
that wanted, the more handhold,you know, the more custom
service, and put them, get themto buy into the application? Can
we get them to add their dollarsthere? Can we get them to invest
(22:04):
there? And can we graduate themthrough marketing and
communications, which is much ofwhat's driving that. So I think
that's kind of interesting thatso many firms are sort of
dipping their toe into figuringout different models. Do you see
a lot of that? Yeah.
Matt Sonnen (22:17):
And again, everybody sort of uses different
language, on on how they'reexpressing it to clients. But,
yeah, I think you do need toshow them a menu of all the
different things that you haveto offer. But then there should
be some sort of price tagassociated with with that,
whether you're saying that'sunder under an AUM, or it should
be under revenue, or, you know,the fees that they're paying.
(22:38):
But if you, you know, a lot offirms just say, Oh, if you give
us 20 million, we can do this.
If you give us this. If you giveus 10 million, we can do that.
If you give us 5 million, we cando that. Another problem where
they run into though, is theydiscount their fees so much that
even though that it's a $5million Portfolio, they're
actually paying you as ifthey're only, you know, $2
million Portfolio, or whateverit may be. So you that's another
place where ri owners, they lookat the end of the year and they
(23:00):
go, I don't understand how wedon't have any don't have any
money. How is there no earnings?
How is there no cash flow to thebusiness when we brought in all
these new clients, well, youdiscounted your fees drastically
to win the business. You have tobe aware of your cost to serve
your each of your households.
Kelly Waltrich (23:16):
I'm smiling about this because this is a
conversation I just had with myhusband about his firm, because
they're all battle. They're notbattling. They're they're
discussing what their minimumsize is, and his he says exactly
what you know from the voice ofthe COO. He says, it's the fee,
as long as it is, if the fee isthis, it doesn't matter what the
(23:38):
size is. So he and I literallyjust had this conversation, and
actually we talked to a lot offirms about lot of firms about
that, because when we do digitalmarketing, a lot of firms will
come to us and say, hey, it's a$2 million minimum, it's a $5
million minimum, it's a $10million minimum. Can you help me
target clients, and then we'llfind out down the road that it's
actually the fee that they'regoing after, and that's very
reliant on what they end upcharging them. So I can't impact
(24:01):
that, you know, through digitalmarketing. So there's some
interesting things that we try,we try to figure out. But you're
right. I feel like you and myhusband are going to have a
great time chatting today whenhe comes in for the round table,
because a lot of things thatyou're saying are very much
along the lines of our dinnerconversations. Yeah. Okay, so
what we are not doing today fromour friend Matt, here is
Matt Sonnen (24:29):
We are not misconstruing our fiduciary duty
to our clients, or we're notgetting confused about what our
obligation is.
Kelly Waltrich (24:38):
Obligations are.
We are not getting confusedabout what our obligations are
to our clients. Oh my gosh. Doyou think it's sometimes just
not clearly? I feel like allthese rules and regulations are
so unclear. Like, can we can wewrite them more clearly and make
it easier for people tounderstand?
Matt Sonnen (24:56):
Right? Yeah. And again, people are coming at it
from a ultra. Holisticperspective. If I can offer
this, I should, yeah, you just,you've got to have your business
hat on from time to time, andyou have to know what that is
going to cost your firm, all theexceptions, all the
customizations. There is a costto that, people time and people
(25:18):
cost in technology cost, and youjust you have to be aware of
what the client is paying youversus what services you're
offering.
Kelly Waltrich (25:27):
Okay, so I have another question for you then.
So are you going to youradvisors and saying, No, we
can't take that business. Andhow does that play out?
Matt Sonnen (25:36):
So yeah, we have guardrails around at different
segments. What the maximumdiscount they're allowed to
offer a client? Hey, I candiscount your fee by 20% or at
this level, I can discount yourfee by 30% whatever it may be.
If they want to go outside ofthose guardrails, they have to
talk to me and our director ofclient engagement as well and
(25:57):
give us the business pitch ofwhy you're going outside of
those guardrails, and we'll kindof try to coach them on well,
have they actually asked for thediscount? Or, like, is this a
competitive situation? Or whydon't you start with a fee here
and see what they say first. OrI'll say, what services are they
asking for? And you can tellthem if you need the fee here. I
can do the fee, but I got to doless services. Or we can do all
(26:20):
of those services, but I can'tgive you the max discount on on
the fee, so you have to havethat push and pull with the
prospect.
Kelly Waltrich (26:28):
You know, it's funny, I think my husband me
being in towards the sales andmarketing side, and him being
towards the operation side, weboth generally see the opposite
side of it, because I want toget the client in. Wow, them,
get them to take on moreservices. And he's very much
black and white in terms ofwhat's doable. I feel like,
(26:48):
what's the movie where they dothe switch, where they switch
lives for a minute? I feel likethat needs to happen for every
marketing leader and everyoperations leader, because I
think both sides are hard,right? Like it? Yeah, it's, it's
hard to be up againstcompetitors who are cutting
their fees. It's being it's hardto go out against the RIA that
says they're democratizing thefamily office and bringing all
(27:11):
of these extra services to a $2million client. Yeah, there's,
there's competitive pressures,but to your point, on the
operational side, there's alsothe realities of the the
profitability of the business.
So I feel like we need, like weneed like a freaky Friday. Yes,
swap it out. Have the salesleaders become ops leaders. Ops
leaders become sales leaders.
Live in each other's shoes for acouple of weeks, and everybody
(27:33):
come back to the table. I feellike this would all go much more
smoothly.
Matt Sonnen (27:38):
So I ran my consulting business for eight
years. It was a consulting fee.
I had to renegotiate the fee. Itwas, I didn't have a, like a fee
schedule, like a you know,schedule, it was every single
client I got. It was, whatservices do you need? Okay, this
is the fee, and I can lower thefee if I lower this, like I so I
got very good at this, thisconversation, because I had to
do it with every single client,as opposed to our advisors are
(27:59):
just, well, that's the feeschedule, and you just you post
it, and clients, most of thetime, just sign the documents
and they're good with it. Butwhen they do get into these
conversations around, what isthe service versus what is the
fee, it is a tough conversation,but if you're going to put your
business owner hat on, you dohave to be aware of of the cost
to your firm for all of thosedifferent services.
Kelly Waltrich (28:23):
Totally agree. I think that's super interesting.
So a household at $10,000 toserve, yeah, I had not seen that
before, but that is superinteresting.
Matt Sonnen (28:34):
Yeah. And then I tried to tell our team, you
know, we're in the PacificNorthwest. I've said our
employees cost more than thenational average. So you have to
assume our cost deserve ishigher, because our employees
cost more in the Seattle area onthe west coast. So, but I said,
let's just go with the 10,000and we can at least start there.
But yeah, that's, that's thenational average that they come
(28:56):
up with when they're talkingabout technology costs and
people costs all the differentservices you're offering?
Kelly Waltrich (29:01):
Yeah, interesting, very interesting. I
need to do that for my firm.
Yeah, feel like that would besome good information to have.
Okay, so what is your advice forcoos sitting in your seat that
need to navigate thesechallenges and need to help
their advisors understand whatthey are supposed to be
(29:23):
delivering at what cost like,what is the starting point? What
is the framework? How are yougoing to help coos at our round
table today and otherwise kickoff this process for a better
internal alignment on deliveryof services, loaded question, I
know.
Matt Sonnen (29:42):
Yeah, no, it's funny, because everyone that
pictures the COO, you think of anerdy guy with a pocket
protector in the in the backroom somewhere. Communication is
key to success in the role, if Iget pushed back all the time,
but if I can communicate. Whywe're doing something a certain
way, or why it's important, whywe can't offer that service at
(30:04):
that cost, whatever, if you canback it up with numbers, if you
can explain yourself clearly andconcisely most of the time.
Advisors, they RIA owners, theysay, Yep, okay, I get it. I get
I don't like it, but I but Iunderstand. So the key for COOs
is continue to work on in yourcommunication skills. Good old
ChatGPT helps with that. Writean email and throw it in there.
(30:27):
See what it see what it comes upwith. But I've found that most
of the time, if you can do agood job explaining why people
are usually okay with it,they'll they'll come at you guns
a blazing and say, This isunacceptable. But if you can do
a good job explaining whysomething is the way it is, why
your firm does it the way itdoes, you're usually in it can
(30:48):
come to a pretty quickagreement.
Kelly Waltrich (30:50):
It's awesome.
Okay, and I just thought of onemore question. Sorry, I was
going to end, but what happensto all the clients that you
can't take? So I think aboutthis all the time, because we do
digital marketing for firms inour space, and there's always a
minimum, right? There's always athreshold. So do we have hordes
of investors, essentiallyshowing interest to advisors all
across the industry that arejust floating around because
(31:14):
they don't hit a minimum? Likeif someone, if you said, No, we
can't take that business. Wheredoes that person go? Where? What
happens next?
Matt Sonnen (31:25):
I'm want to say, I'm they be. They're just do it
yourselfers, right? And they,they just open a retail account
somewhere, and they're doing itthemselves. I'm sure they, they
shop around. My father is a goodexample, an 85 year old
engineer. He's the worst clientany RIA could imagine. Yeah, he
has shopped and shopped andshopped. He is never happy. He
(31:47):
doesn't understanddiversification and that when
certain parts of your portfolioare going up other. He just
thinks, if I'm paying you Mr. OrMrs. Should all go up. It should
all go up at all times, andthat's what I'm paying you for.
And so he is not a good client,but, and so he is always
shopping, saying, I want this, Iwant that. And he's, he's a do
it yourselfer.
Kelly Waltrich (32:06):
Do it yourselfers. Yeah, I have this,
like, moral I that keeps me upat night, because I think to
myself, like, are we drivinglots of leads to firms who are
never responding to peoplebecause they don't hit minimums,
and ultimately, what should I dowith that? So maybe that's a
conversation that we'll takeoffline. Yeah, all right, Matt,
(32:27):
this has been great. I'm so gladthat you were able to jump on
the pod. I love your don't dothat. I love that you surprised
me with it, and I love thatyou're here in Philly with us
today for the COO Roundtable. Sothank you for all of it.
Matt Sonnen (32:37):
Thank you. This is this is great. Really appreciate
it. Thanks so much.
Kelly Waltrich (32:43):
Thanks so much for tuning in. If you enjoyed
today's show, subscribe to benotified when new episodes
become available, and pleaseconsider giving us a five star
review on Apple or Spotify. Thispodcast is sponsored by
intentionally a financialservices growth engine, design
consultancy and agency. If youwant to learn more, please email
(33:04):
me at Kelly, at growintentionally.com, thank you
again for listening and checkback to hear what we're not
doing next.
Unknown (33:12):
The information covered and posted represents the views
and opinions of the guest anddoes not necessarily represent
the views or opinions of KellyWaltrich, the content has been
made available for informationaland educational purposes only.
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