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Julie Littlechild:
Welcome to another episode of Becoming Referable, the podcast that helps you be the kind of advisor people can’t stop talking about. I’m Julie Littlechild and on this week’s show Steve and I are thrilled to be speaking with Mark Tibergien. Mark is, of course, the CEO of Pershing Advisors Solutions. Prior to that, he was a Principal at Moss Adams, where he was the Partner in Charge of the Business Consulting Group, the Chairman of the Financial Services Industry Group, and the Partner in Charge of the Business Valuation Group.

For all of these accomplishments, Mark is equally well known for everything that he does to advance the industry. He’s generous with his time, asks the big questions, shares his insights and generally agitates for a more professional industry. He’s also the author of four books, Practice Made Perfect, How to Value, Buy or Sell a Financial Advisory Practice, Practice Made (More) Perfect and The Enduring Advisory Firm. In this episode we talk to Mark about how advisory firms need to evolve going forward and we talk about the impact of brand on referability.

We also have a really interesting conversation about culture, what it really means and how it can impact success. With that, let’s dive right into the conversation. Mark, welcome, I’m really excited to talk to you today.

Mark Tibergien:
Thank you, good to be here.

Julie Littlechild:
Why don’t we start with a broad topic and talk a little bit about growth, I know we could talk about so many things. I know that as firms are evolving, they need to think about all the various different levers that they could pull to drive growth, whether that’s organic or inorganic. I know that they have questions on where they should focus their time. Our podcast, of course, is about becoming referable. I wanted to perhaps start there, dive in a little, and maybe get some general comment from you, on how you feel advisory firms can become more referable.

Mark Tibergien:
Sure. I think what’s interesting about this business is, for many advisory firms, obtaining more clients is not their biggest challenge. Having the capacity to serve more clients is where the real pain exists. Because of that limited capacity, I think that many advisory firms struggle to focus on the kinds of things that make them available to the market place, that make them referable, to make people think that this is a firm that actually is taking on new clients. In fact, I can site multiple examples where advisors have shared with me that new prospects have said, “I didn’t think that you were taking on anymore clients, I thought you were tapped out.” Obviously, that’s one of the big concerns that people in this business have to be conscious of, is whether or not they’re even available to be dated.

Steve Wershing:
Mark, can I ask you to elaborate on that a little bit? Do you think that’s coming more because advisors are not communicating that they’re looking for new clients or because they’re so rushed or busy or those kinds of things that the clients just have the impression that they don’t have that capacity?

Mark Tibergien:
I think it’s a combination of both. I think the lack of capacity is real. I also think that those who have their business all filled up, generally act like they’re not available. Their heads are down, their butts are up and they’re focused on doing as much business as they can with their existing clients. In a way, even the things that advisors say to centers of influence or prospects, could be something like this, “How are you doing, how is your business?” They’ll respond, “I’m just so busy, there’s just so much going on. I don’t know if I can do anymore.” It’s utterances like that that give the impression that you’re not available.

When I look at the question of what dynamic growth is going to be within the advisory business, I think of it both in terms of emotional capacity as well as physical capacity to grow. There’s a tendency to project a “woe is me, I’m so overworked” kind of mentality that I think it tends to cause people to think twice before they engage you.

Julie Littlechild:
Can you tell us what you mean exactly by emotional versus physical? Do you just mean the feeling that I am overwhelmed and the way that that comes across?

Mark Tibergien:
Exactly. Just imagine this whenever you speak to your friends who often talk about how much they’re working and how they don’t have time to breathe or take a vacation or spend time with their family. These kinds of impressions are really lasting in the minds of others as to whether or not somebody is making themselves available to the marketplace. To me, language is so important in this business and how we say what we say, makes a huge difference in the minds of the people that we’re trying to persuade to engage with us.

Frankly, I think that that sort of message really is creating a negative consequence for many advisors. Instead of saying, “I’m so busy because I’m so popular” they’re saying, “I’m so busy and I am so tired.”

Julie Littlechild:
Just as Steve said, that problem could exist in reality, as it structurally the business is over capacity and they quite literally couldn’t take someone on without dropping the ball somewhere, which I guess is one issue. But, let’s assume that’s not entirely the problem, how would you respond to that question beyond saying, “I’m not busy at all, I’m sitting here with my feet up on the desk. I don’t even know what to do with my time”?

Mark Tibergien:
If you think about who do you want to hang around with, with positive, energetic people, or tired and depressing people? Once again, if you take an inventory of your language and your body and words, then you become more conscious of it. I think as a practical matter, if an advisor is actually feeling that, if that is in fact what’s wearing the individual down, part of this might be taking an inventory of which clients they’re working with. Because if you have the right mix of relationships within your practice, then you should be able to invest in capacity. If you don’t have the right mix of clients, then this may be the time to start jettisoning the bottom few that are sucking up all of your energy and resources. There’s a practical solution here, but all of this feeds into itself.

Julie Littlechild:
So, capacity, real or otherwise, and the language we choose obviously helps us to become more referable. Any other key parts of business that you think support or drive become referable or drive more referrals?

Mark Tibergien:
Yes. I had a boss a number of years ago in one of my previous careers. When I was part of a partnership that we sold our firm to Moss Adams, he said to me, “Now that you don’t have a company to run,” he said, “There are three things that will make you a great partner here. The first is to develop a technical specialty. The second is to develop a market specialty. The third is to become famous in both.” I’ve always thought that that was a great lesson for anybody in any service business, is to be conscious of how they are perceived in whatever marketplace they want to achieve some prominence.

For most advisors, it’s really a question of identifying which communities make sense for them and how do they achieve some level of prominence within it. The community could be national, it could be local, but the fact is that it would be a community that has a shared sense of needs or values or issues that allow you to build around and to literally become famous within. I think that within the advisory business, like any service business, that sort of thinking is really critical to developing a proper referral structure for your business.

I think the second part of this is really thinking about how you’re actually tracking and identifying the optimal client within your practice. I think one of the things that advisors often struggle with is not getting referred the right types of opportunities. The key to this, once again using language, is to be very clear about how you define your optimal client, whether it’s by the particular needs that you’re addressing or other demographics that are important, or whether or not you can be clear about that particular community. Or, all ways in which you raise the consciousness of the marketplace as to what type of business you’d like to do.

Steve Wershing:
How do the two of those interplay with each other, Mark? It sounds like it would be easier to become famous among a fairly well-defined group of people, as opposed to becoming famous generally. I think that adds to the comment you made before about market, segment and industry. Can you elaborate a little bit on how those two play with each other?

Mark Tibergien:
I think it’s easier if you can define a community and become prominent within it first, then you can open up other communities, that’s key. Part of this is going from being a single practitioner to building a firm, so there’s a way in which to approach this from a firm-wide strategy. I think the narrower you define the market, the easier it is to achieve that level of prominence. But, it doesn’t mean that you have to stop there. That said, in certain communities, if you’re in a mid-size or small size city, let’s say, you may not have the luxury of developing a niche. Unless it’s maybe medical or dental practitioners or something like that.

Then, the challenge is really instead of becoming focused around the niche, the community, you might be focused around a technical specialty. As an example, you may develop a reputation for being the leading specialist to serve business owners in transition. Or, somebody who is committed to some other technical specialty like estate planning or managing risk, or sudden wealth. There are other ways in which to think about this that allows people to say, if you have this situation, then you should be calling Steve, or you should be calling Julie, and that’s the way to think about it.

Julie Littlechild:
I’m sure you find this, I know we do because we’re big advocates of defining that niche market, what do you find gets in advisors’ way? Because it feels like an almost insurmountable challenge for some to accept that that might be a path worth pursuing.

Mark Tibergien:
Yeah. I think it’s a fear of what they’re missing. It’s the same reason people are reluctant to make commitments to any relationship. Is, if I do that then who will I not be able to see. I think in the advisory business, the notion is that there is so much money floating around, if I define myself too narrowly, then will somebody with wealth completely ignore me? I think that’s one.

I think two is, people have to understand that just declaring a niche, is not going to be sufficient. There has to be an experience that reflects that. Part of it is saying, why am I focused on that particular community and why would they be interested in doing business with me. And then, what is the client experience that they want? So, imagine for a minute that your niche was gays and lesbians, how conscious are you in the language that you use or the way in which you promote yourself, or the services that you provide that are relevant to that community.

The same would be true if your market were Evangelical Christians. Are you conscious of the terminology you’re using? Are you linked to what they read in scripture that’s relevant to them? This actually goes a long way towards building this brand that you’re not just focused on who you’re selling to, but you’re creating a client experience that you can relate to. That’s what really drives the referral experience in my opinion.

Julie Littlechild:
You used the word brand, and we’ve sort of introduced that concept here. How do you define that, first of all? We’ve gone from niche to brand. What do you see as the differences there?

Mark Tibergien:
Well, they’re clearly linked in so many ways. I think that the brand identity really revolves around why you exist and why anybody should care. When you look at service businesses, one of the things we know is that if you are recognized as one of the top three firms in your defined market, then you’re going to get twice as many opportunities to do business as the fourth next firm. That to me really reflects what brand is, is how you’re identified. But, to extend that a little bit more, one of the things that I covered in one of my books, Practice Made (More) Perfect, was the fact there are eight different driving forces that advisory firms have.

To give you an example of this, one that we just talked about would be niche. In other words, you’re known for a defined market. Another common differentiator or driving force in a business would be technical superiority, which I touched on as well. Whether it’s knowledge of sudden wealth, or knowledge of divorce and how to manage through that, those two tend to be the most common.

There are other examples of this as well. Market dominance is a way in which people can be recognized as being noticeably superior or raise their prominence in a marketplace. You have to be careful, if you’re in the tri-state area around New York, it’s going to be extraordinarily difficult to be market dominant because there are so many competitors. But if you can define a segment of the tri-state area that makes sense, like working with financial industry professionals as your client base, then you could achieve dominance doing that.

Another way, frankly, that people are differentiating themselves is by being low-cost. You could argue that the robo-advisors are really using cost as their differentiator almost more than technology because they’re very conscious about getting down to 25 basis points and ease of use as being part of that proposition. I think in the advisory business, for many advisors, probably the most common way in which they’ve developed their brand, is what I call the famous person strategy. This is not transferable, but it is highly impactful. Whereas an individual you build everything around your reputation, your brand. This is why many people might have radio programs or newspaper columns or give a lot of speeches to different groups and they have an organization that supports them. It can be extraordinarily rewarding, but the notion of creating transferable valuable is a tough one in that case.

Steve Wershing:
On top of that, we have the issue that if you get really wealthy clients to come to a model like that, they’re going to want to talk to you. They’re going to want to talk to the celebrity. I’ve had actually somebody say to me at an advisory board, the value of access to the principals is I want to know that if I have an issue, I can make a phone call and talk to the person whose name is one the door. So, it’s not just a succession issue, it’s a workload issue. What thoughts do you have about how someone could build a public reputation for their company using those PR types of things, getting quoted in the papers, making speeches or those kinds of things that would help build a brand as opposed to building that cult of personality?

Mark Tibergien:
I think that’s valid and that is part of the challenge. Part of this is recognizing that over the lifecycle of our practice, our brand definition may change. Nothing is forever, including how we want to be known and there are plenty of examples in the advisory world where people have established as an individual practitioner and ultimately built an ensemble and then a firm brand. In fact, today, we see almost 700 firms in the marketplace with a billion dollars of assets, many of them have multiples of billions of dollars of assets. They tend to be the fastest growing firms because they’ve managed to shift and become less dependent on a single principal for driving that business.

The individual who founded the firm, has to be comfortable with the fact that his personal identity may become less of a factor in the future of the business and that’s a really hard conversation to have with many of them, as you know. I think it’s important to recognize, where are you in the lifecycle and how do you reduce dependency on what got you here because that’s not going to help you get you there. You have to think about it in those terms.

Julie Littlechild:
This may lead us into a different part of the conversation, and if I’m taking us off topic, let me know. Mark, we could use you as a very good example here, if you don’t mind. But someone who has built an extraordinary profile in the industry, at previous firms and currently, and yet has built a team and a firm around and has invested in that team to ensure that the work being done isn’t just about you. Can you tell us how you did that to some extent? Or, the lessons that you learned that would be helpful for advisors in that way?

Mark Tibergien:
Yes. I appreciate that comment. It’s one of the challenges of building personal brands, is that when you’re an individual consultant, it’s much easier to get away with it than when you’re leading an enterprise. I had that experience both when I was with Moss Adams and now at Pershing. Part of this is positioning yourself as more as the mentor and the developer of people to continue with the philosophy and the approach and the culture and the beliefs that you have. So that when they go into the community, there is consistency among all of us in terms of what we say.

The fulfillment that I get out of all this, just using that example, is the vast of majority of new clients that we sign on at Pershing don’t know who I am. They come from different places, they may have never met me and it may take a while before I even have a chance to get acquainted with them. Part of this is because all the people that we’ve attracted to Pershing in this process, are able to articulate all of those elements that I talked about. About our strategy, our optimal client, our culture of values, what we deliver and so forth.

I don’t think it’s easy, but it’s something that the leader of the firm has to be comfortable relinquishing and in fact, do as much as you can to push others out to become more visible. That becomes part of what we do, is that the speaking engagements that may have come to me first, now are going to other people within the firm. The interviews with the media, we’re involving other people in those, instead of having me be the focal point for that. It has to be a conscious effort to disentangle you from the monster you created in order to allow the firm to flourish.

Julie Littlechild:
You mentioned culture, I’ll ask you this in the context of the fact that Steve and I have just done some research around referrals and the issue of team certainly came up, and the extent to which the team could articulate the value proposition to the extent to which they were trained in helping to grow referrals and whatnot. But, do you see a really strong connection or a connection at all between culture and generating referrals?

Mark Tibergien:
I absolutely do. In fact, just to kind of give you an anecdote about this, back in my consulting days, even before Moss Adams, the firm that we sold to Moss Adams. We always did consulting jobs as teams and so, since I was one of the leaders of the teams, I would usually bring a younger associate along. We were working with advisor firms and after the engagement was done, one of the things that I would like to ask the young associate is, if you had the money to invest, would you hire that firm?

I was always fascinated by their reaction and it wasn’t always positive. Inevitably, what it came down to, was a feeling that it was either extraordinarily positive or yes, I love these people and I want to be around them and I believe their ethics and the way in which they show respect towards each other. Or, it was completely the opposite of that where there wasn’t the kind of reflection of integrity or commitment to people development or utterances of respect that they were looking for. That would make a difference in how they would feel about those businesses.

One of the things that I think that revealed to me over time, was that if your own employees wouldn’t feel good about you, what makes you think your clients would? That idea has stuck with me for many years as a result of just simple exchanges with junior consultants that I’ve worked with.

Julie Littlechild:
That raises the other issue of if I’m looking at a potential firm as a prospect, I’m going to be experiencing the culture. When I walk through the door, I’m going to see it in the person that greets me and the people that I meet with. I’m also going to be looking at the team, I’m going to be looking at the bench strength that’s in place and I’m going to be asking myself, are these people going to be around for some time. I’m making an assumption that you see a connection as well between the whole issue of having the team and bench strength and being attractive to prospective clients as well.

Mark Tibergien:
You probably see this more than I do, but I think that one of the things that I’m hearing consistently is that new generations of clients, particularly Gen X, which is a fairly cynical generation for a lot of reasons tend to go through a lot of validation and don’t accept things at face value as our parents or even my generation of Boomers would. There was a time when we would build a relationship and then decide to do business with somebody. Now I think what we find is that people want to judge your competence and thinks like the depth of your organization and the stability of what you do and they may or may not choose to build a relationship with you. It may just be a professional kind of dynamic.

I think that prospects are going through a validating process and they’re looking more under the hood as to what really is driving your business. How do you make decisions? Who can I call on when I need something to get done or when I need attention? I think that it’s quite clear that there’s a reason why ensemble practices are growing faster than solo practices, because they have that depth. But because they do have so many more moving parts within their firms, it really does require the prospects to get better acquainted with what’s going inside those businesses.

I think of this as an immense risk, but also an immense training opportunity for advisory firms to begin addressing not just whether they’re hiring the right people, but whether or not the people they hire shares the values of the principal within the business itself and that’s a hard thing.

Steve Wershing:
What are some of the ways a founder can have a culture where they transmit those values? How does an advisor bring his team along, how does the founder develop that culture to project the kinds of messages that they hope get out there?

Mark Tibergien:
The first part of this is really creating a statement of cultural values. In fact, one that I use often is one that we had at Moss Adams called Pillar P-I-L-L-A-R. Its components were Passion for excellence, Integrity, Lifetime Learning, Lead by Example, Accountability and Respect for Others. In a simple way, we were able to say what was important to us in terms of how we operated as a business. Then we created a performance evaluation process which specifically evaluated the behavior of our employees and our partners, not just the employees but our partners as well in each of those areas. Kind of a sidelight is we would nominate maybe 20 candidates for partners per year and half of them would make it through. The number one reason why a candidate wouldn’t make it to partner was because they failed part of that cultural values test. The biggest failure tended to be around the “R”, the respect term.

When you’re clear on what kind of behavior you’re reinforcing, it also forces you to ask questions about how you’re going to hire somebody. When you’re thinking about a candidate to be added to your firm, you can look at the resume to see where they went to school and you can ask them questions to determine their attitude. But think about other ways in which you can reveal how they deal with situations. How do they feel about certain people? What would be examples where they themselves may have felt mismanaged and what caused that to occur.

Part of this is subjective, but you know it. Often times you smell it before you hear it and this becomes important in leading businesses the more complex they become, is that you find different ways to not just identify what you hold dear, but how you evaluate it and how you coach people to be responsive to it, or you coach them out of the business.

Julie Littlechild:
We’ve talked about some big concepts of niche and expertise and brand, team, culture, all of which are critical and I probably characterize as making you more referable. I can think as an advisor you might think about that and think, well okay, I can do all of that but then how do I activate the referrals? How does that, in your mind, translate in specific terms to generating more referrals? Have you seen examples where that’s been the case?

Mark Tibergien:
I think I’ve seen a number of examples where people have been able to translate their market focus, their cultural values and their approach to business into becoming more compelling to prospects. In the end, as long as we have to deal with humans, we want to make sure that they’re humans that not only can we tolerate, but probably enjoy. I can think of a firm right now that just joined us, they were a very large break away team that had an extraordinarily strong set of principles, much of it is based in their shared faith. But, it was something that when they are making decisions about their business, it’s filtered through that. And their clients recognize this and it’s something that their clients can talk about. That this is a firm that reflects exactly what I think is important.

That’s why I trust them to do business. I think in the end, one of the things that we’re finding about the advisory business, it’s less about investing and more about life and that everybody who’s in this business has access to the same information about how to rebalance portfolios and PIC funds or ETFs and do their sorts of things. Not to diminish the skills of people who do this more effectively than others, but I think that more and more the question is how do advisors engage with their clients in a way that seems to be listening to them and reflecting what’s important to them. We see these examples all the time of combining it.

Now the question is how do you promote that in the marketplace? How do you share this in a way that people begin to recognize you’re more than just an investment manager? In reality, what you’re doing is you’re acknowledging that everything that you’re fearing and dealing with are issues that I’m familiar with and can help guide you through that. That becomes an entirely different conversation in the course of being referable to the marketplace, because now you have your existing clients and centers of influence who can talk about you in a way that is more than, “Yeah, she’s a great money manager” or, “She deals with a lot of rich people.” There’s something more to it, there’s greater narrative that you’re hoping to create.

Julie Littlechild:
Wonderful, I could talk to you for ages about this, but I promise I won’t, I’m sure you’ve got things to do. Mark, thank you so much for your time, it’s been wonderful chatting with you.

Mark Tibergien:
You bet. Thanks to you both.

Steve Wershing:
Hey folks, Steve again. Thanks for joining us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes, it really helps. You can get all the links, show notes and other tidbits from these episodes at becomingreferable.com. You can also get our free report, Three Referral Myths That Limit Your Growth, and connect with our blogs and other resources. Until next time, so long.