April 29, 2022 • 27 mins
Planning or managing your wealth is a fantastic investment not only for yourself but also for your business, and there are wealth management services that will help you manage your wealth with high value and establish a trust-based relationship.
In this episode, we meet Richard Jollon, a wealth manager at Morgan Stanley. In the episode, he discusses the distinction between a stock brokerage firm and a wealth management firm, as well as the services provided to its clients. He also discussed how to battle human biases while managing funds and how their organization demonstrates values to their clientele.
If you're interested in learning more about organic growth, growth by acquisition, or the increase of capitalization of your company, this will be interesting and useful for you.
Key Takeaways
-What is the Difference between a Stock brokerage firm and A wealth management
-What are the services of Wealth Management Business
-The Common Target Audiences of Wealth Management Business
-How to Combat Human Biases and How Wealth managers addressed the problem
-How Wealth Management Demonstrate Values to their Clients
Quote Takeaways
“You know, I believe that at a certain point, you begin to define success less by financial measures and more by the quality of your relationships with your clients.” - Richard
Speakers of this Episode
-Richard T. Jollon | Profile | Linkedin
Vice President - Financial Advisor at Morgan Stanley
Morgan Stanley - Sentinel Group
-Christopher Lisle | Linkedin
Growth strategy advisor for the ecosystem of investors, IBanks and the companies they work with (middle market).
Acclaropartners.com
Time Stamp
[00:00] Introduction
[01:15] Guest Background
[03:50] Stock brokerage firm vs wealth management
[05:12] Wealth management services
[06:47] Why Consider get the service
[08:59] Home Office
[10:43] Target Audience of Wealth Management
[12:00] The Edge of Morgan Stanley from others
[14:11] Combating Human Biases
[17:30] Finding Prospects
[18:53] Demonstrating Value
[22:20] When is the right time?
[23:42] Defining Success
[25:22] Takeaways from the Guest
In this episode, we meet Richard Jollon, a wealth manager at Morgan Stanley. In the episode, he discusses the distinction between a stock brokerage firm and a wealth management firm, as well as the services provided to its clients. He also discussed how to battle human biases while managing funds and how their organization demonstrates values to their clientele.
If you're interested in learning more about organic growth, growth by acquisition, or the increase of capitalization of your company, this will be interesting and useful for you.
Key Takeaways
-What is the Difference between a Stock brokerage firm and A wealth management
-What are the services of Wealth Management Business
-The Common Target Audiences of Wealth Management Business
-How to Combat Human Biases and How Wealth managers addressed the problem
-How Wealth Management Demonstrate Values to their Clients
Quote Takeaways
“You know, I believe that at a certain point, you begin to define success less by financial measures and more by the quality of your relationships with your clients.” - Richard
Speakers of this Episode
-Richard T. Jollon | Profile | Linkedin
Vice President - Financial Advisor at Morgan Stanley
Morgan Stanley - Sentinel Group
-Christopher Lisle | Linkedin
Growth strategy advisor for the ecosystem of investors, IBanks and the companies they work with (middle market).
Acclaropartners.com
Time Stamp
[00:00] Introduction
[01:15] Guest Background
[03:50] Stock brokerage firm vs wealth management
[05:12] Wealth management services
[06:47] Why Consider get the service
[08:59] Home Office
[10:43] Target Audience of Wealth Management
[12:00] The Edge of Morgan Stanley from others
[14:11] Combating Human Biases
[17:30] Finding Prospects
[18:53] Demonstrating Value
[22:20] When is the right time?
[23:42] Defining Success
[25:22] Takeaways from the Guest
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:10):
Welcome to Strategic Growth Council, apodcast about strategic growth and mergers and acquisitions
for the middle market. Our listenersare growing their businesses intentionally in a discipline
fashion, perhaps by acquisition, orthey may be contemplating a sale. In
every episode, I interview an expertin the world of strategy or growth or
(00:30):
mergers and acquisitions. And today I'mjoined by Richard Jollin of the Sentinel Oak
Group at Morgan Stanley. Welcome Richard, thank you, good morning. Glad
to have you. I'll apologize inadvance those of you who are listening,
you're probably listening a few weeks laterthan now. It's currently March sixteenth,
(00:51):
the day before St. Patty's Day, the day before the start of the
real rounds of March Madness. I'mexcited, and unfortunately that time of year
often brings a few sniffles, soyou may hear a little bit of that.
I'll try to avoid that as muchas I can. Richard, would
be great if you would share withour audience a minute or so of background
(01:14):
about yourself. Well, the firstthing about myself is I'm super excited because
my alma mater, Longwood, thisis their first trip to the to the
March Madness this year, and nowwe have to play Tennessee, which I'm
not sure I'm so excited about,but nonetheless, tomorrow should be an exciting
day for us. So I'll leadin with that. Um you know,
(01:34):
graduated from Longwood in Virginia, smallschool and then went to work in the
federal contracting arena and we helped youknow, companies get their products and services
added to federal you know, acquisitioncontracts. We work with manufacturers and vendors
all across the country, actually allacross the world to help do that.
(01:57):
And then I out on my ownwith that business and we were very successful
and the name of that business wasgov Mark and we during that business,
I decided to go back to schooland get my MBAU and then we got
an offer for that business and wetook that offer and a couple of At
(02:21):
that time, I was pretty young, you know, I still had a
family and it was starting a familyat that point and needed to keep working.
So the short story is I endedup at Morgan Stanley and I went
through what's you know known as theirtraining program and that was Gosha started.
That was like eight years ago.Now time flies because you know, on
(02:43):
the personal side, we have fourlittle kids, but my oldest is eight
and I've got two four year oldsat the bottom there, so we're busy.
I bet I didn't know you werea successful entrepreneur in your own right,
so that must have set you upwell in your your role with Morgan
Stanley. I suppose not many ofyour peers and colleagues have entrepreneurial successes under
(03:06):
their belts. I you know,success is a relative term, but I
know what it's like to write apayroll check, you know, and I
think I think that does. Ithink that does separate me from I guess
a lot of people, and Iknow what it's like to stress over those
types of things and be on thehook for the performance of an entity.
So yes, that has helped mein this business, be able to communicate
(03:30):
with clients and understand where they're comingfrom and kind of I've been in their
shoes. Yeah, So you sayyou're with your clients, you are.
I don't know what term you woulduse, a wealth advisor, wealth manager.
How does your work differ from whata stock brokerage firm does. Yeah,
(03:52):
I wouldn't say that a stock firmis separate from being a wealth manager.
You know, I think that youknow, wealth advisory or wealth management
is now part of the world haschanged a lot. You know, at
Morgan Stanley we serve some of America'swealthy as families, We serve you know,
(04:14):
everybody from the mom and pop businessup to that. And wealth management
is a more holistic approach. Soit's not just about you know, what
stock you're going to buy, whatyou know, mutual fund you should hold
or sell. It's more about lookingat, you know, the plan for
your financial lifestyle, how you're goingto get from point A to point B.
(04:38):
And of course for business owners that'salways very entangled with you know,
their business. A lot of timesthey built it in a significant amount of
their wealth is in that business.So I would say wealth management is really
about trying to maximize the wealth equation, you know, through a lot of
different variables. And you talk aboutthe wealth equation Asian so and the various
(05:01):
variables. Does that relate to themix of services that your firm offers are
what are those services? What arethose variables? Yeah, no, that's
a great question. Um, yes, it does relate directly to that.
So one thing we already touchdown waskind of asset ownership, asset management,
but for a business owner, foran executive, for a high earner,
(05:26):
you know, insurance, lending,a state planning, financial planning. If
you're very fortunate in life, familygovernance, how are you going to handle
a significant a wealth event with yourfamily, How are you going to plan
to pass that to the next generation, and what are going to be the
rules around that. It can alsobe helped with qualified retirement plans. You
know a lot of mid sized businesseswhen they go from say a five million
(05:50):
dollar company to a you know,a fifty million dollar company, there's a
lot of growth there. You know, their four one K plan might move
to a point where it needs tobe audited. We can help with all
that. So, um, that'sa that's a quick There's more than that,
but that's a good snippet, Ithink. And so I suppose in
many cases, your best clients orclients that have the most need, maybe
(06:14):
we should say, are those thatare planning for an exit and probably planning
well in advance. So you know, if if a listener is in that
situation, whether they're they're a businessowner and they're kind of contemplating an exit,
but they already have a relationship inplace. Maybe they've got an investment
advisor, insurance firm, or somealternative investments in place, some other advisors.
(06:35):
Why would they consider working with awealth manager such as yourself when they're
contemplating, you know, a saleof their business and they o they have
other service providers. Yeah, soI think it's pretty simple. First off,
I would say that it never hurtsto get a second opinion, you
know. Yet, we're not inthe business of hard selling people on our
(06:58):
services. Typically our service will sellthemselves and typically where we gain clients as
value add and they'll see that.But I would say the one thing that
should be a red flag is ifthey have an advisor that does not have
experience with playing an exit for aclient, and they should consider talking to
some other people. Because it's onething to be on the receiving end of
a bunch of assets and say,oh, I've helped plan for an exit.
(07:18):
It's another thing to actually have donethe footwork, the groundwork with the
state attorneys, the CPAs, allthe things that kind of value add into
getting the client from point A topoint B. And we're very fortunate.
Morgan Stanley. We have a internalresource that's called our Family Office Resources Group,
(07:41):
and this is actually a team ofattorneys and CPAs and people who have
done this for many, many manyyears for all different types of families across
the country, and so they're agreat resource for us. And what we
do is we typically will set upa call or a conference and we have
the Family Office Source Group involved withthe client CPA, their attorney. We
(08:03):
don't write the documents for the client. We just share knowledge about what cannon
can't be done and you know,advantages and disadvantages to different structures. Okay,
that's great. Now, there isprobably a formal definition of family office.
I'll probably butcher it a little bit, but for our listener's sake,
a family office is an entity thatexists to manage the affairs of a high
(08:28):
net worth family. And as ascomplicated as that can be. When you
talk about the Family Office Resource Groupat Morgan Stanley, are they working exclusively
with designated family offices or could theyjust be wealthy individuals and their and their
families what maybe you just elaborate alittle bit on what those folks do in
(08:50):
advance of a transaction. Yeah,So I would say everybody that starts a
family office starts out as a wealthyindividual. So the answer to that question
is yes. I think what happensover time is more money, more problems.
Right. So if you think aboutit from you start as this individual
or family that's had this significant oris going to have the significant wealth of
(09:13):
then there is a kind of ametamorphosis that takes place of a process,
and one part of it is yourliquid assets to invest here in Morgan Stanley.
But there's a whole other aspect ofit, which is, you know,
governance. How are you going togovern If you're going to hire external
professionals? Are you going to outsourcethat? You know, what's your structure
going to be our family office resourcegroup? Not only do they have the
(09:35):
resources, we pay for research thatpulls down information from family offices all across
the country, all across the world, and we can share that with our
clients so they can be benchmarking internally. So what I would say to answer
your question directly is it depends.Yes, it can start at the individual
level and it can be actually muchsmaller than you think. I think the
(09:56):
entry point was when you start havingan estate problem. That's when you want
to get them involved and then upfrom there. Yeah, that's that's very
helpful. UM. And that makessense, and that that's a good trigger,
UM, a good benchmark or hurdlefor people to be thinking about it
when you start right exactly. UM. So you know a lot of service
(10:18):
providers experts that I speak with onthis podcast, UM that serve the ecosystem
of middle market mergers and acquisitions andentrepreneurs, owners of mid sized businesses.
UM. Those service providers often focusby industry. Do you guys do that?
Is there would there be a reasonfor you to do that? No,
(10:41):
we don't, UM. I wouldsay our industry, our focus is
business owners, executives and wealthy families, right we UM. You know.
One of the nice things about gettinga masters and businesses you get to learn
a lot about different industries. UM. So I have yet to come across
the industry where I can't grasp thethings that I need to understand about the
(11:03):
industry or I think ask the rightquestions. And of course I'm always interested
in learning something new, you know. The personal wealth transaction aspect of it,
though, tends to be pretty similaracross industries, and so I would
say again that our focus is reallythose business owners, executives and wealthy families.
And it's worthwhile noting that we wereintroduced a few months ago through a
(11:26):
private equity group based in northern Virginia, where we both both live, so
we both sort of are in thesame circles in terms of private equity and
m and am So, how doyou how does a firm like yours,
how does Morgan Stanley? How doesyour your specific group differentiate? I imagine,
I imagine it's tough. I imagineyou're in a fairly competitive field with
(11:50):
a lot of a lot of folkstrying to tout their their wisdom or their
stock picking expertise. But there's alot more to it than that, right,
Yeah, I think that's easy.I think it's service. Right.
I think a lot of people inthis industry, or even outside this industry,
think it's about, you know,the best fund or asset management,
(12:11):
and I think that's foolish, tobe honest with you, our business is
about relationships. If a wealth advisortells you that they always pick the best
stocks or funds, honestly, youshould really think about what they're telling you,
because as we all know, Idon't care if you're a private equity
investor or a business owner. Wedon't always make the right decisions. Nobody
does. And I think the worstpart about that is it can cause a
(12:37):
reparable harm down the road, youknow it it causes distrust between the advisor
and the client. And so reallyagain, we focus on the service,
and we focus on putting a placea plan, and that plan and that
service helps create the value for theclients. So the value might be the
service they don't worry about their everydaybanking needs or you know, how they're
(12:58):
going to fund their lifestyle, orit might be the planning aspect where we're
helping them walk through that process ofexit on the personal side so they can
focus on maximizing the value of theirbusiness, which they're very good at already.
UM. And I think that's howwe differentiate UM. Well, you
(13:18):
had said something when we spoke earlierabout you know, combating people's natural human
behavioral biases, and you know,it really boils down to, you know,
a prospect of yours must invest atremendous amount of trust in in you,
(13:39):
UM, an individual that they mayhave been referred to right, um,
But that must be a difficult bridgeto to build. You know that
the suddenly someone that they've been introducedto is is um in charge of or
or um what's the right way toput it? Has has the ability to
influence dramatically some significant aspects of wealth. How do you deal with that?
(14:03):
And well, maybe elaborate on thatpoint about combating natural human behavioral biases.
I wrote that down. Yeah,so let's address the trust issue first we
deal our business. I say thisvery often our business. We are trust
driven business, meaning the product thatI think clients buy from a reputable wealth
(14:26):
manager or a reputable financial advisor arethe product of trust. If you don't
have trust in your relationship, thereare so many things that can go wrong.
I think trust comes from honesty andknowledge base. Right. So,
for instance, you know you weretalking about building that trust. Let's take
your example of somebody who already hasa relationship and that's a that's a that's
(14:50):
a difficult situation we face many times. But what we typically find is that
when we bring the knowledge to thetable and we show them what we can
do, how we can help them, and how our services franchise, that's
the first leg right, and thenthe second leg of that is we do
what we say we're going to do. We deliver on the deliverables. It's
not different from any other business inthat respect, and that builds a trust
(15:13):
relationship. And the other thing isassets are transportable. You know, clients
can leave us at any time.But so we really believe that that service
and that trust, those things kindof go together. And then as far
as behavioral biases, you know,one of our biggest jobs as advisors is
we have to help clients combat theirown individual biases. And you know,
(15:35):
that could be the recency bias ofwe're going to stay in the market because
things have been good, and we'regoing to say, well, you don't
need to be in right, you'veyour way past your goal, we've had
a great year. We need tostick with our plan. But if you
don't have trust, that conversation iscompletely eradicated. It doesn't work because they
(15:56):
think that you're telling them. Sowe try to build from a foundation of
knowledge, trust and doing what wesay we're going to do, so we
kind of get that feedback cycle ofhaving a great relationship. Yeah, as
I was just gonna say, soundslike consulting. I mean, I spent
my entire career as a consultant.Sometimes you have to tell your client things
they don't want to hear, andyou have to let the facts demonstrate why
(16:18):
your opinion is not just opinion,it's grounded in fact and reality. It's
actually you know, that's actually areally great way to think about it.
I mean as far as our business, as the clients get wealthier, it
does become more of a consulting basedrelationship. And I would say, you
know, kind of as the oldsaying goes, if your friend always tells
you you're right, they're probably notthat great of a friend. I would
(16:40):
say, if you're consultant or yourwealth manager tells you you're always right,
and probably not that great at consultingor wealth management. Yeah, and just
out of curiosity when I you know, I started my own business more than
twenty years ago. That business iscalled a Claro Growth Partners at claropartners dot
com if you want to check thatout and that business. Um, I
(17:00):
didn't take very long for the uh, we'll just categorize them generally the wealth
management community to find me. Andat the time there were an awful lot
of phone calls that would come in. So I got pretty good at screening
those. And the calls still come, although they're there, they seem to
be fewer and further between. Andthen I get things in the mail,
(17:22):
I get invitations to dinners and soon and so forth. What do you
do? How do you how doyou find new prospects, new leads?
Yeah, I mean we we arebasically at this point referral only. UM.
We we we have a minimum thatwe work with. UM. You
know, typically we want to havea million or more in investable assets.
But we will consider situations of emergingwealth, which is you know, maybe
(17:45):
a traditional a non traditional situation wherethe business owner's wealth is tied up in
their business and obviously they're getting readyto go through an exit. That's a
that's a situation we see frequently.UM. But we do hold client appreciation
events, you know, and weyou know, we ask our clients if
they want to to invite friends whomight benefit from talking to us or working
(18:07):
from us. But we're not inthe we're not in the cold calling area
anymore. Trust me. I youknow, I did my fair share that
and it was fun, you know, it taught me a lot of things
I tell people all the time.You can be scared of it, but
it teaches you how to talk topeople on the phone. You know,
you learn a lot from it.And so I wouldn't go back and take
that away. But no, wedon't. We don't do that anymore.
(18:30):
Yeah, okay, So I'm wonderingwhether there is an example that you could
share with our listeners of how youdemonstrated value for a client, like literally
out of thin air, in away that they wouldn't have anticipated or expected.
Um, you know, how howcan you demonstrate value or return on
investment or return on time? Yeah, turn on experience. Are there is
(18:56):
there in an example you can share? Yeah? Well, I have to
careful what I say regarding or shareof regarding actual client situations. But I
can give an example that closely resemblessomething done for a client of Morgan Stanley.
So let's use an example. Let'ssay a client owns a business and
they're thinking about selling that business.It's a private business, right, They
received evaluation that that year, let'ssay for fifty million. The owner is
(19:21):
happy, but they think, youknow, with some work with their executives
and maybe some recruiters. They canthey can up the sales, they can
improve the margins, and they thinkthat they can move the business from that,
you know, that valuation and maybethree or four x that in say
three to five years at that pointin time, Right, that is a
crucial moment for planning. And thereason that's a crucial moment is you're about
(19:45):
to create more value. And ifyour business is already worth fifty million dollars,
and assuming you're married, you're alreadyover the estate tax limit. Okay.
So basically the estate tax limit istwenty four million roughly for a married
couple. If you're not married,it's roughly twelve million. Okay. So
(20:07):
at that time of sale, they'relooking at a state tax is being paid
at the first valuation of roughly fortypercent on that additional twenty six million,
right, big tax, a differencebetween the fifty and the twenty four,
that's exactly right. And so inthis case, if the business owner is
the sole owner, and let's saythat they do get to that one hundred
(20:30):
and fifty two hundred million dollars youknow, proceeds in sale, they're looking
at an estate tax bill on somethinglike one hundred and fifty to one hundred
and seventy five million, right,that's a big number. Right. So
however, if they do some planningin advance, right, they could significantly
(20:52):
reduce that liability. And we havehelped people do this before. So if
you start working with your CPA,your attorney in US, there are ways
that we can assist in solving thatproblem. And that is a major problem
that people see an exit because ofcourse they put all their money and their
(21:15):
time, their effort into that businessand then it reaches this valuation level.
And actually the same thing I wouldmention for private equity folks as well,
because they would own a piece ofa business, right and they do that
exact same thing. Their piece mightbe demonstrably smaller, but if they're already
near that level from other places thatthey've accumulated wealth, and they get there
(21:37):
and they're trying to make sure they'renot paying more in estate taxes, this
strategy can work for them as well. Yeah, that's great. That's a
good example. And as you saidearlier, given the team that you have
behind you, it's a collaborative decisionmaking process that involves people with different skill
sets and background and so forth.So you know, let's say hypothetically,
(22:03):
well maybe maybe maybe we'll use meas an example. I'm a business owner.
When is the right time for abusiness owner or senior executive to reach
out to somebody like yourself. Isit the point that you start thinking about
the implications of an exit. Isthere a good time? Yeah, I
would say, I think anytime abusiness owner is curious, it's it's great
(22:27):
to have a conversation, right becauseif you know the business has value.
You know, we just talked aboutan estate planning problem, but I think
there are other places we add value, you know, insurance planning for executives
and business owners four oh one k. You know, as I said,
when you move from one level ofthe next, are you at the right
(22:48):
place? A lot of people don'trealize they have liability as the operator of
their four oh one K plan,and so we we can help with that.
So I think any time that youhave a question is a good time
to work out. But definitely whatyou just said, if you are thinking
about exiting, yes, talk tosome professionals that have experienced. You know,
(23:11):
it will save you a lot ofheartache. In the end. You
don't want to find out later thatyou could have saved all that money.
You just yea, Yeah, It'sreally all about strategy and planning ahead and
kind of getting all the ducks ina row well in advance. We see
that in many different dimensions in thework that we do in value creation and
(23:32):
exit planning from the standpoint of astrategy consulting firm. So I get it.
Um, So how do you definesuccess? Well, I've got four
kids. You know, I'm reallylucky, and you know, I have
a great family, and I've beenvery fortunate in this business. As I
(23:53):
said, you know, I startedat Morgan Stanley with nothing, right,
I mean we I had no clients. So I've been very fortunate in that
I've created a great client base.I have a ton of great clients and
great relationships. Um. You know, at a certain point, I think
you start to define success less byyou know, financial measures and more by
(24:15):
the quality of the relationships you have, you know, and that's a big
factor for us in working with clients. We we want to work with people
we can have quality relationships with.UM And so you know, for me,
I don't know. I think Ithink we're we're we're successful and we're
we're doing well and I'm having fun. I mean, you know, that's
(24:37):
that's success. Right, that's good. What what age range are your children?
I can ask? Oh, yeah, my oldest is eight, my
middle daughter is six, and mytwins are four. So that's right.
I forgot you have twins. Yeah, that's even more work. Wow fun.
So, um, we only havetime for a couple more questions,
(24:57):
but I'll let you decide which directionwe go in challenges that you're facing,
opportunities, dreams, and passions,and then and then we've got one last
question that I definitely want to askyou, which, by the way,
it has to do with how ourlisteners can reach out to you and engage
with you. But challenges, opportunities, dreams, ambitions, challenges, let's
(25:22):
talk about that one. I thinkin the industry there's a lot of it's
competitive, you know, and Ithink that sometimes that makes it hard to
combat things that people hear out thereabout, you know, maybe wealth management
or what we do or the serviceswe offer. Um. But I think,
as I would, you know,try to be a positive like every
(25:45):
challenge has an opportunity, and sowe think that's true. We think when
you spend more time with your clientsand you help them understand and that you
know, they prosper and they dowell because of your services. We think
that that is kind of the keyto SESS and the key to where we're
going. UM. And then Ithink, you know, goals, Um,
(26:07):
we don't necessarily want to grow ourclient base. We just we want
more great clients, you know,like we don't need a new client,
we want a great client. Andthat that I think is what our goal
is is we can have more greatclients if we can help people more when
they're going through these I guess moreinteresting, more difficult situations, that would
be a goal of ours. That'sgreat, that's good. So, UM,
(26:32):
I'm going to give you an opportunityto put out a little commercial for
yourself. Sentinel Oak Group, MorganStanley. How do people reach out to
you? How do they find you? Yeah, so you can go if
you just google us on the MorganStanley sent the Sentinel Oak Group, you
can find our website. UM,you can reach out to us. You
can email me UM, or youcan call in my lines listed on the
(26:55):
website. UM. So it's it'sfairly easy to find us on the worldwide
web, you know, and we'rehappy to have a conversation if you think
it's appropriate. Richard Jollin, thankyou, it's been a pleasure. And
for our listeners, thank you.Thanks for listening. This is the Strategic
Growth Council. It's a podcast aboutgrowing your business intentionally in a discipline way,
(27:18):
or acquisitions, mergers and acquisitions aswell, So thanks for listening and
give us a give us a lie. This podcast was produced by Heartcast Media.
Welcome to Strategic Growth Council, apodcast about strategic growth and mergers and acquisitions
for the middle market. Our listenersare growing their businesses intentionally in a discipline
fashion, perhaps by acquisition, orthey may be contemplating a sale. In
every episode, I interview an expertin the world of strategy or growth or
(00:30):
mergers and acquisitions. And today I'mjoined by Richard Jollin of the Sentinel Oak
Group at Morgan Stanley. Welcome Richard, thank you, good morning. Glad
to have you. I'll apologize inadvance those of you who are listening,
you're probably listening a few weeks laterthan now. It's currently March sixteenth,
(00:51):
the day before St. Patty's Day, the day before the start of the
real rounds of March Madness. I'mexcited, and unfortunately that time of year
often brings a few sniffles, soyou may hear a little bit of that.
I'll try to avoid that as muchas I can. Richard, would
be great if you would share withour audience a minute or so of background
(01:14):
about yourself. Well, the firstthing about myself is I'm super excited because
my alma mater, Longwood, thisis their first trip to the to the
March Madness this year, and nowwe have to play Tennessee, which I'm
not sure I'm so excited about,but nonetheless, tomorrow should be an exciting
day for us. So I'll leadin with that. Um you know,
(01:34):
graduated from Longwood in Virginia, smallschool and then went to work in the
federal contracting arena and we helped youknow, companies get their products and services
added to federal you know, acquisitioncontracts. We work with manufacturers and vendors
all across the country, actually allacross the world to help do that.
(01:57):
And then I out on my ownwith that business and we were very successful
and the name of that business wasgov Mark and we during that business,
I decided to go back to schooland get my MBAU and then we got
an offer for that business and wetook that offer and a couple of At
(02:21):
that time, I was pretty young, you know, I still had a
family and it was starting a familyat that point and needed to keep working.
So the short story is I endedup at Morgan Stanley and I went
through what's you know known as theirtraining program and that was Gosha started.
That was like eight years ago.Now time flies because you know, on
(02:43):
the personal side, we have fourlittle kids, but my oldest is eight
and I've got two four year oldsat the bottom there, so we're busy.
I bet I didn't know you werea successful entrepreneur in your own right,
so that must have set you upwell in your your role with Morgan
Stanley. I suppose not many ofyour peers and colleagues have entrepreneurial successes under
(03:06):
their belts. I you know,success is a relative term, but I
know what it's like to write apayroll check, you know, and I
think I think that does. Ithink that does separate me from I guess
a lot of people, and Iknow what it's like to stress over those
types of things and be on thehook for the performance of an entity.
So yes, that has helped mein this business, be able to communicate
(03:30):
with clients and understand where they're comingfrom and kind of I've been in their
shoes. Yeah, So you sayyou're with your clients, you are.
I don't know what term you woulduse, a wealth advisor, wealth manager.
How does your work differ from whata stock brokerage firm does. Yeah,
(03:52):
I wouldn't say that a stock firmis separate from being a wealth manager.
You know, I think that youknow, wealth advisory or wealth management
is now part of the world haschanged a lot. You know, at
Morgan Stanley we serve some of America'swealthy as families, We serve you know,
(04:14):
everybody from the mom and pop businessup to that. And wealth management
is a more holistic approach. Soit's not just about you know, what
stock you're going to buy, whatyou know, mutual fund you should hold
or sell. It's more about lookingat, you know, the plan for
your financial lifestyle, how you're goingto get from point A to point B.
(04:38):
And of course for business owners that'salways very entangled with you know,
their business. A lot of timesthey built it in a significant amount of
their wealth is in that business.So I would say wealth management is really
about trying to maximize the wealth equation, you know, through a lot of
different variables. And you talk aboutthe wealth equation Asian so and the various
(05:01):
variables. Does that relate to themix of services that your firm offers are
what are those services? What arethose variables? Yeah, no, that's
a great question. Um, yes, it does relate directly to that.
So one thing we already touchdown waskind of asset ownership, asset management,
but for a business owner, foran executive, for a high earner,
(05:26):
you know, insurance, lending,a state planning, financial planning. If
you're very fortunate in life, familygovernance, how are you going to handle
a significant a wealth event with yourfamily, How are you going to plan
to pass that to the next generation, and what are going to be the
rules around that. It can alsobe helped with qualified retirement plans. You
know a lot of mid sized businesseswhen they go from say a five million
(05:50):
dollar company to a you know,a fifty million dollar company, there's a
lot of growth there. You know, their four one K plan might move
to a point where it needs tobe audited. We can help with all
that. So, um, that'sa that's a quick There's more than that,
but that's a good snippet, Ithink. And so I suppose in
many cases, your best clients orclients that have the most need, maybe
(06:14):
we should say, are those thatare planning for an exit and probably planning
well in advance. So you know, if if a listener is in that
situation, whether they're they're a businessowner and they're kind of contemplating an exit,
but they already have a relationship inplace. Maybe they've got an investment
advisor, insurance firm, or somealternative investments in place, some other advisors.
(06:35):
Why would they consider working with awealth manager such as yourself when they're
contemplating, you know, a saleof their business and they o they have
other service providers. Yeah, soI think it's pretty simple. First off,
I would say that it never hurtsto get a second opinion, you
know. Yet, we're not inthe business of hard selling people on our
(06:58):
services. Typically our service will sellthemselves and typically where we gain clients as
value add and they'll see that.But I would say the one thing that
should be a red flag is ifthey have an advisor that does not have
experience with playing an exit for aclient, and they should consider talking to
some other people. Because it's onething to be on the receiving end of
a bunch of assets and say,oh, I've helped plan for an exit.
(07:18):
It's another thing to actually have donethe footwork, the groundwork with the
state attorneys, the CPAs, allthe things that kind of value add into
getting the client from point A topoint B. And we're very fortunate.
Morgan Stanley. We have a internalresource that's called our Family Office Resources Group,
(07:41):
and this is actually a team ofattorneys and CPAs and people who have
done this for many, many manyyears for all different types of families across
the country, and so they're agreat resource for us. And what we
do is we typically will set upa call or a conference and we have
the Family Office Source Group involved withthe client CPA, their attorney. We
(08:03):
don't write the documents for the client. We just share knowledge about what cannon
can't be done and you know,advantages and disadvantages to different structures. Okay,
that's great. Now, there isprobably a formal definition of family office.
I'll probably butcher it a little bit, but for our listener's sake,
a family office is an entity thatexists to manage the affairs of a high
(08:28):
net worth family. And as ascomplicated as that can be. When you
talk about the Family Office Resource Groupat Morgan Stanley, are they working exclusively
with designated family offices or could theyjust be wealthy individuals and their and their
families what maybe you just elaborate alittle bit on what those folks do in
(08:50):
advance of a transaction. Yeah,So I would say everybody that starts a
family office starts out as a wealthyindividual. So the answer to that question
is yes. I think what happensover time is more money, more problems.
Right. So if you think aboutit from you start as this individual
or family that's had this significant oris going to have the significant wealth of
(09:13):
then there is a kind of ametamorphosis that takes place of a process,
and one part of it is yourliquid assets to invest here in Morgan Stanley.
But there's a whole other aspect ofit, which is, you know,
governance. How are you going togovern If you're going to hire external
professionals? Are you going to outsourcethat? You know, what's your structure
going to be our family office resourcegroup? Not only do they have the
(09:35):
resources, we pay for research thatpulls down information from family offices all across
the country, all across the world, and we can share that with our
clients so they can be benchmarking internally. So what I would say to answer
your question directly is it depends.Yes, it can start at the individual
level and it can be actually muchsmaller than you think. I think the
(09:56):
entry point was when you start havingan estate problem. That's when you want
to get them involved and then upfrom there. Yeah, that's that's very
helpful. UM. And that makessense, and that that's a good trigger,
UM, a good benchmark or hurdlefor people to be thinking about it
when you start right exactly. UM. So you know a lot of service
(10:18):
providers experts that I speak with onthis podcast, UM that serve the ecosystem
of middle market mergers and acquisitions andentrepreneurs, owners of mid sized businesses.
UM. Those service providers often focusby industry. Do you guys do that?
Is there would there be a reasonfor you to do that? No,
(10:41):
we don't, UM. I wouldsay our industry, our focus is
business owners, executives and wealthy families, right we UM. You know.
One of the nice things about gettinga masters and businesses you get to learn
a lot about different industries. UM. So I have yet to come across
the industry where I can't grasp thethings that I need to understand about the
(11:03):
industry or I think ask the rightquestions. And of course I'm always interested
in learning something new, you know. The personal wealth transaction aspect of it,
though, tends to be pretty similaracross industries, and so I would
say again that our focus is reallythose business owners, executives and wealthy families.
And it's worthwhile noting that we wereintroduced a few months ago through a
(11:26):
private equity group based in northern Virginia, where we both both live, so
we both sort of are in thesame circles in terms of private equity and
m and am So, how doyou how does a firm like yours,
how does Morgan Stanley? How doesyour your specific group differentiate? I imagine,
I imagine it's tough. I imagineyou're in a fairly competitive field with
(11:50):
a lot of a lot of folkstrying to tout their their wisdom or their
stock picking expertise. But there's alot more to it than that, right,
Yeah, I think that's easy.I think it's service. Right.
I think a lot of people inthis industry, or even outside this industry,
think it's about, you know,the best fund or asset management,
(12:11):
and I think that's foolish, tobe honest with you, our business is
about relationships. If a wealth advisortells you that they always pick the best
stocks or funds, honestly, youshould really think about what they're telling you,
because as we all know, Idon't care if you're a private equity
investor or a business owner. Wedon't always make the right decisions. Nobody
does. And I think the worstpart about that is it can cause a
(12:37):
reparable harm down the road, youknow it it causes distrust between the advisor
and the client. And so reallyagain, we focus on the service,
and we focus on putting a placea plan, and that plan and that
service helps create the value for theclients. So the value might be the
service they don't worry about their everydaybanking needs or you know, how they're
(12:58):
going to fund their lifestyle, orit might be the planning aspect where we're
helping them walk through that process ofexit on the personal side so they can
focus on maximizing the value of theirbusiness, which they're very good at already.
UM. And I think that's howwe differentiate UM. Well, you
(13:18):
had said something when we spoke earlierabout you know, combating people's natural human
behavioral biases, and you know,it really boils down to, you know,
a prospect of yours must invest atremendous amount of trust in in you,
(13:39):
UM, an individual that they mayhave been referred to right, um,
But that must be a difficult bridgeto to build. You know that
the suddenly someone that they've been introducedto is is um in charge of or
or um what's the right way toput it? Has has the ability to
influence dramatically some significant aspects of wealth. How do you deal with that?
(14:03):
And well, maybe elaborate on thatpoint about combating natural human behavioral biases.
I wrote that down. Yeah,so let's address the trust issue first we
deal our business. I say thisvery often our business. We are trust
driven business, meaning the product thatI think clients buy from a reputable wealth
(14:26):
manager or a reputable financial advisor arethe product of trust. If you don't
have trust in your relationship, thereare so many things that can go wrong.
I think trust comes from honesty andknowledge base. Right. So,
for instance, you know you weretalking about building that trust. Let's take
your example of somebody who already hasa relationship and that's a that's a that's
(14:50):
a difficult situation we face many times. But what we typically find is that
when we bring the knowledge to thetable and we show them what we can
do, how we can help them, and how our services franchise, that's
the first leg right, and thenthe second leg of that is we do
what we say we're going to do. We deliver on the deliverables. It's
not different from any other business inthat respect, and that builds a trust
(15:13):
relationship. And the other thing isassets are transportable. You know, clients
can leave us at any time.But so we really believe that that service
and that trust, those things kindof go together. And then as far
as behavioral biases, you know,one of our biggest jobs as advisors is
we have to help clients combat theirown individual biases. And you know,
(15:35):
that could be the recency bias ofwe're going to stay in the market because
things have been good, and we'regoing to say, well, you don't
need to be in right, you'veyour way past your goal, we've had
a great year. We need tostick with our plan. But if you
don't have trust, that conversation iscompletely eradicated. It doesn't work because they
(15:56):
think that you're telling them. Sowe try to build from a foundation of
knowledge, trust and doing what wesay we're going to do, so we
kind of get that feedback cycle ofhaving a great relationship. Yeah, as
I was just gonna say, soundslike consulting. I mean, I spent
my entire career as a consultant.Sometimes you have to tell your client things
they don't want to hear, andyou have to let the facts demonstrate why
(16:18):
your opinion is not just opinion,it's grounded in fact and reality. It's
actually you know, that's actually areally great way to think about it.
I mean as far as our business, as the clients get wealthier, it
does become more of a consulting basedrelationship. And I would say, you
know, kind of as the oldsaying goes, if your friend always tells
you you're right, they're probably notthat great of a friend. I would
(16:40):
say, if you're consultant or yourwealth manager tells you you're always right,
and probably not that great at consultingor wealth management. Yeah, and just
out of curiosity when I you know, I started my own business more than
twenty years ago. That business iscalled a Claro Growth Partners at claropartners dot
com if you want to check thatout and that business. Um, I
(17:00):
didn't take very long for the uh, we'll just categorize them generally the wealth
management community to find me. Andat the time there were an awful lot
of phone calls that would come in. So I got pretty good at screening
those. And the calls still come, although they're there, they seem to
be fewer and further between. Andthen I get things in the mail,
(17:22):
I get invitations to dinners and soon and so forth. What do you
do? How do you how doyou find new prospects, new leads?
Yeah, I mean we we arebasically at this point referral only. UM.
We we we have a minimum thatwe work with. UM. You
know, typically we want to havea million or more in investable assets.
But we will consider situations of emergingwealth, which is you know, maybe
(17:45):
a traditional a non traditional situation wherethe business owner's wealth is tied up in
their business and obviously they're getting readyto go through an exit. That's a
that's a situation we see frequently.UM. But we do hold client appreciation
events, you know, and weyou know, we ask our clients if
they want to to invite friends whomight benefit from talking to us or working
(18:07):
from us. But we're not inthe we're not in the cold calling area
anymore. Trust me. I youknow, I did my fair share that
and it was fun, you know, it taught me a lot of things
I tell people all the time.You can be scared of it, but
it teaches you how to talk topeople on the phone. You know,
you learn a lot from it.And so I wouldn't go back and take
that away. But no, wedon't. We don't do that anymore.
(18:30):
Yeah, okay, So I'm wonderingwhether there is an example that you could
share with our listeners of how youdemonstrated value for a client, like literally
out of thin air, in away that they wouldn't have anticipated or expected.
Um, you know, how howcan you demonstrate value or return on
investment or return on time? Yeah, turn on experience. Are there is
(18:56):
there in an example you can share? Yeah? Well, I have to
careful what I say regarding or shareof regarding actual client situations. But I
can give an example that closely resemblessomething done for a client of Morgan Stanley.
So let's use an example. Let'ssay a client owns a business and
they're thinking about selling that business.It's a private business, right, They
received evaluation that that year, let'ssay for fifty million. The owner is
(19:21):
happy, but they think, youknow, with some work with their executives
and maybe some recruiters. They canthey can up the sales, they can
improve the margins, and they thinkthat they can move the business from that,
you know, that valuation and maybethree or four x that in say
three to five years at that pointin time, Right, that is a
crucial moment for planning. And thereason that's a crucial moment is you're about
(19:45):
to create more value. And ifyour business is already worth fifty million dollars,
and assuming you're married, you're alreadyover the estate tax limit. Okay.
So basically the estate tax limit istwenty four million roughly for a married
couple. If you're not married,it's roughly twelve million. Okay. So
(20:07):
at that time of sale, they'relooking at a state tax is being paid
at the first valuation of roughly fortypercent on that additional twenty six million,
right, big tax, a differencebetween the fifty and the twenty four,
that's exactly right. And so inthis case, if the business owner is
the sole owner, and let's saythat they do get to that one hundred
(20:30):
and fifty two hundred million dollars youknow, proceeds in sale, they're looking
at an estate tax bill on somethinglike one hundred and fifty to one hundred
and seventy five million, right,that's a big number. Right. So
however, if they do some planningin advance, right, they could significantly
(20:52):
reduce that liability. And we havehelped people do this before. So if
you start working with your CPA,your attorney in US, there are ways
that we can assist in solving thatproblem. And that is a major problem
that people see an exit because ofcourse they put all their money and their
(21:15):
time, their effort into that businessand then it reaches this valuation level.
And actually the same thing I wouldmention for private equity folks as well,
because they would own a piece ofa business, right and they do that
exact same thing. Their piece mightbe demonstrably smaller, but if they're already
near that level from other places thatthey've accumulated wealth, and they get there
(21:37):
and they're trying to make sure they'renot paying more in estate taxes, this
strategy can work for them as well. Yeah, that's great. That's a
good example. And as you saidearlier, given the team that you have
behind you, it's a collaborative decisionmaking process that involves people with different skill
sets and background and so forth.So you know, let's say hypothetically,
(22:03):
well maybe maybe maybe we'll use meas an example. I'm a business owner.
When is the right time for abusiness owner or senior executive to reach
out to somebody like yourself. Isit the point that you start thinking about
the implications of an exit. Isthere a good time? Yeah, I
would say, I think anytime abusiness owner is curious, it's it's great
(22:27):
to have a conversation, right becauseif you know the business has value.
You know, we just talked aboutan estate planning problem, but I think
there are other places we add value, you know, insurance planning for executives
and business owners four oh one k. You know, as I said,
when you move from one level ofthe next, are you at the right
(22:48):
place? A lot of people don'trealize they have liability as the operator of
their four oh one K plan,and so we we can help with that.
So I think any time that youhave a question is a good time
to work out. But definitely whatyou just said, if you are thinking
about exiting, yes, talk tosome professionals that have experienced. You know,
(23:11):
it will save you a lot ofheartache. In the end. You
don't want to find out later thatyou could have saved all that money.
You just yea, Yeah, It'sreally all about strategy and planning ahead and
kind of getting all the ducks ina row well in advance. We see
that in many different dimensions in thework that we do in value creation and
(23:32):
exit planning from the standpoint of astrategy consulting firm. So I get it.
Um, So how do you definesuccess? Well, I've got four
kids. You know, I'm reallylucky, and you know, I have
a great family, and I've beenvery fortunate in this business. As I
(23:53):
said, you know, I startedat Morgan Stanley with nothing, right,
I mean we I had no clients. So I've been very fortunate in that
I've created a great client base.I have a ton of great clients and
great relationships. Um. You know, at a certain point, I think
you start to define success less byyou know, financial measures and more by
(24:15):
the quality of the relationships you have, you know, and that's a big
factor for us in working with clients. We we want to work with people
we can have quality relationships with.UM And so you know, for me,
I don't know. I think Ithink we're we're we're successful and we're
we're doing well and I'm having fun. I mean, you know, that's
(24:37):
that's success. Right, that's good. What what age range are your children?
I can ask? Oh, yeah, my oldest is eight, my
middle daughter is six, and mytwins are four. So that's right.
I forgot you have twins. Yeah, that's even more work. Wow fun.
So, um, we only havetime for a couple more questions,
(24:57):
but I'll let you decide which directionwe go in challenges that you're facing,
opportunities, dreams, and passions,and then and then we've got one last
question that I definitely want to askyou, which, by the way,
it has to do with how ourlisteners can reach out to you and engage
with you. But challenges, opportunities, dreams, ambitions, challenges, let's
(25:22):
talk about that one. I thinkin the industry there's a lot of it's
competitive, you know, and Ithink that sometimes that makes it hard to
combat things that people hear out thereabout, you know, maybe wealth management
or what we do or the serviceswe offer. Um. But I think,
as I would, you know,try to be a positive like every
(25:45):
challenge has an opportunity, and sowe think that's true. We think when
you spend more time with your clientsand you help them understand and that you
know, they prosper and they dowell because of your services. We think
that that is kind of the keyto SESS and the key to where we're
going. UM. And then Ithink, you know, goals, Um,
(26:07):
we don't necessarily want to grow ourclient base. We just we want
more great clients, you know,like we don't need a new client,
we want a great client. Andthat that I think is what our goal
is is we can have more greatclients if we can help people more when
they're going through these I guess moreinteresting, more difficult situations, that would
be a goal of ours. That'sgreat, that's good. So, UM,
(26:32):
I'm going to give you an opportunityto put out a little commercial for
yourself. Sentinel Oak Group, MorganStanley. How do people reach out to
you? How do they find you? Yeah, so you can go if
you just google us on the MorganStanley sent the Sentinel Oak Group, you
can find our website. UM,you can reach out to us. You
can email me UM, or youcan call in my lines listed on the
(26:55):
website. UM. So it's it'sfairly easy to find us on the worldwide
web, you know, and we'rehappy to have a conversation if you think
it's appropriate. Richard Jollin, thankyou, it's been a pleasure. And
for our listeners, thank you.Thanks for listening. This is the Strategic
Growth Council. It's a podcast aboutgrowing your business intentionally in a discipline way,
(27:18):
or acquisitions, mergers and acquisitions aswell, So thanks for listening and
give us a give us a lie. This podcast was produced by Heartcast Media.
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