Non-Beta Alpha Clearing Week: Peter Dorsey Managing Director, Institutional Sales TD Ameritrade

View Transcript
Ryan Morfin:
Welcome to NON-BETA ALPHA. I’m Ryan Morfin. On today’s episode, we have Peter Dorsey from TD Ameritrade, talking about what advisors need to do today in the do or die moment to grab on to technology and scale. This is NON-BETA ALPHA.
(music)
Peter, thank you for joining us. We really appreciate you doing the show.
Peter Dorsey:
Thanks for having me, Ryan. Pleasure to be here.
Ryan Morfin:
Well, TD has been on hypergrowth mode hence the MNA. But we’d love to pick your brain about just kind of some of the macro trends that you see in wealth management today given the volatility we have in the current economy.
Peter Dorsey:
There’s a ton to talk about Ryan. So I don’t know where you want to start, but I’ll throw out one that I think is really kind of metamorphosizing in this business and it’s technology. And as we kind of look at some of the more successful advisors out there, I kind of see a common thread between a lot of them and it’s embracing everything that they can to do a couple of different things. When you talk about growing a firm, it’s how do you use technology to capture them in the pipeline at a lower price point so it becomes actually scalable and efficient to attract those prospects and those high net worth families. The second thing is the coming intergenerational wealth transfer.
I’m sure you saw the Cerulli Report, but over the next 25 years, $68 trillion is going to change hands. It’s a lot of money and it’s a lot of time. And it’s just interesting to watch how some of these FinTech firms are starting to disrupt the independent space where we disrupted the wirehouses 20 years ago. And the most successful advisors, they really have to start to look at those new wealth creators and those people that are inheriting the money because they have very different opinions of money, philanthropy and what they want from an advisor. And so I think that’s probably the biggest trend. There’s obviously several others, but we can start with that one. It’s massive.
Ryan Morfin:
And I call it the FinTech wars. I think a lot of these FinTech companies are starting to vertically integrate. You saw what happened with Orion starting to put the tax stack together. Do you see that the FinTech companies that are going to emerge are going to be the ones that grow through acquisition or do you think it’s still early innings for new disrupters to come into the space?
Peter Dorsey:
It’s not too late for new entrants to come in, but that window, it’s shrinking every single quarter. And the problem is that a lot of these firms, whether it’s the TAMPs acquiring other TAMPs or TAMPs are acquiring other pieces of technology or investment management, they’re getting to scale really, really quickly. The problem for some of the new entrants is it’s tough to get to scale just growing organically. So I’m not saying it’s done for some of the new entrants, but it’s getting really hard because you see some of these mega mergers.
In fact, I saw one yesterday, you guys probably saw too with FormulaFolios is merging with Brookstone and that’s going to create a six and a half, I think, or $7 billion TAMP. And we saw what happened with FTJ and Orion and there’s countless other examples. With Buckingham and Loring Ward. I mean, the list goes on and on. And so you start to look at these things and everyone’s kind of chasing Envestnet which is king of the street in the TAMP world. And it’s hard to compete from a pricing and a service perspective as a new entrant. So it’s not too late for some of you newcomers, but the window, it’s getting smaller.
Ryan Morfin:
And from the custody standpoint, from that optic in the industry, do you potentially view some of these FinTech companies as potential rivals in the future?
Peter Dorsey:
That’s a great question. Right now, no. I mean, so we work… and I’m not just speaking for myself as someone who works for TD Institutional, but as an industry, as the custody industry as a whole, they’re not. They’re very much filling a void that we don’t do from a custody perspective because most of us want to embrace that choice, autonomy, whatever you want to call it, independence, open architecture. And they’re filling that void. Whether they choose to do that in the future, I think is a question that remains to be answered, but we really don’t… or I should say, I don’t really look at them that way. They’re actually very much of a complimentary partner in most cases. Having said that, you also have to look at, if you kind of broaden that lens a little bit, you have to look at betterment, you have to look at personal capital and the effects that they’re going to have, maybe not in the immediate future, but one of the effects that they might have in the next three to five years. It could be a force to be reckoned with if you’re an advisor.
Ryan Morfin:
No. And I think advisors need to think about some of the business models that some of these FinTech companies have, whether it’s to displace them in the future from their clients or create a wedge between that relationship. And then the second thing is just looking at the transparency probably needed in the industry because a lot of these companies are privately held of, is it owned by competitive RA or is it owned by competitive broker-dealer? Or who’s in the cap table? Is it just venture capital? Is it a clean tech company or is there some folks kind of hidden in the cap table? As those questions start to become front of mind, as they should in my opinion, I think it’s going to be very interesting to see kind of where there may be a perceived conflict of interest in some of the aggregation strategies and the vertical integration. I think when you look at cap tables and you start to see people’s strategies unfold and it’s something we’re starting to pay attention to because some of the FinTech companies, I think, are wearing multiple hats without putting that on their marketing materials.
Peter Dorsey:
I think you’re right on that, Ryan. When I talk to advisors today, I don’t hear them a lot say, Hey, I feel threatened by some of these robos or artificial intelligence or what have you. So I’m not hearing that right now. I think that will be a different answer if you and I are having this conversation in three or four years, it might be a very different answer. But what I do see is that they’re forcing the traditional advisor, your human advisor, to add more services. So you can get away with your current pricing arrangement because the end client that you’re serving, they may not leave you for a robo at least entirely, but they might start to use them. It’s a foot. It’s a wedge in the door. It’s a foot in the door I should say.
And , what we’re starting to see is these end clients, they’re not as price sensitive as people think that they are, but they are very much value sensitive. Meaning, they might continue to pay your current fee when you compare yourself to some of these robos, but you better be able to justify it through means other than investment management and whether that’s tax planning, whether that’s wealth management, intergenerational wealth transfer. You have to add more services there. And so that’s the immediate repercussion that I’ve seen.
Ryan Morfin:
And we’re starting to see, we’ll call, a rotation out of index and a rotation out of some of these, we’ll call, mutual fund ETF strategies into more active management. I don’t know if you guys are seeing that as well in a lot of the advisors you talk to?
Peter Dorsey:
I would say that we’re actually seeing something a little bit different. The OCIO, the outsourced chief investment officer is actually starting to grow on our platform. So it’s new. But I think for the most part, RIA, which is the majority of our clients, they kind of look at investment management as, it’s table stakes at this point. And being able to separate yourself with performance versus a benchmark is really, really tough to do. And those who can do it, it’s expensive. So we are starting to see more and more folks move towards outsourcing their investment management, that OCIO model and allow them to concentrate and use those resources on different things.
So we are starting to see that trend starting to peek its head a little bit and have folks kind of turn to say, listen, it’s just not in my wheelhouse. It’s too hard. My clients don’t really understand it. They think they understand risk reward. I have this signed investment policy statement that says they want this balance. And then when I have a performance review, it doesn’t match up with their expectations. So we are starting to see that happen a little bit more and people outsource that investment management.
Ryan Morfin:
And again, if you’re going to go active, you’re going to need to have a really robust tech stack to compete in today’s fundamental analysis. It’s a different world than it was 10 years ago. Totally agree. The scale though, some of these TAMPs, that if we’re just going to stay on that for a moment, how much more MNA do you think there is and does that start to limit the number of choices people have to allocate assets to?
Peter Dorsey:
It most certainly does. And so what happens is when you have fewer players in the game there’s less choice and it’s harder to compete with those folks. So I think you’ll be left with a handful of pretty large significant players in the temp space. And they’re really starting to kind of take a look at some of the traditional e-brokers, if you will, and look at those as kind of competitors. And speaking of one that I’ve seen out there who shall remain nameless, they just launched a TAMP like platform. And so a lot of the TAMPs and I’m hearing from them directly that they’re looking at some of the e-brokers out there like they’re competition. So that’s starting to happen as well. But when you have less and less choice, pricing then gets called into question in terms of what’s going to happen with your economics and your price point.
Ryan Morfin:
And so TD has been one of the leaders, recent years, pulling folks out of the wirehouses into the independent channel. What do you make of the Morgan Stanley E-Trade deal, the Goldman Sachs Folios deal? What are the wirehouses thinking at this point as it relates to competing with the independent model and maybe competing with the custody firms as well?
Peter Dorsey:
So I think that’s the essence of one of the benefits that we’ve had. And I would say, just not speaking for TD, but as an independent industry, it’s hard to argue there’s been a more beneficial trend-
PART 1 OF 4 ENDS [00:11:04]
Peter Dorsey:
It’s been a more beneficial trend for us than people leaving the wirehouses, that journey to independence. And so when we talk to folks like that, sometimes they tend to do a two step and they’ll go from a wirehouse to an independent BD all the way to an RIA. And so when you look at that, a lot of, I think the wirehouse execs, I’m not speaking for Morgan Stanley specifically, but they think that the RIA independent model, I mean, they crush independent thinking. I worked at two of them. I know it. And it leads to this perception that the RIA space in that platform is limited, and that’s not true. But when you look at their platforms, they’re pretty robust. And so you have this kind of juxtaposition where folks are leaving because they really want, for the most part, two things; they want equity and they want control.
And when we talk to people who are leaving wirehouses, those are the two main things that they’re looking for and those are certainly things that you can deliver on in the RIA space. Onto your first question, Ryan, I think you look at some of these again, continued mergers on Wall Street. What I would say is that you’re now starting to see Wall Street kind of dip its toe into the RIA space, which we hadn’t seen in the past. They kind of have always shunned at the independent RIA model and I think with those two acquisitions that you just mentioned, it’s kind of proof positive that Wall Street’s getting into this space because it is the fastest growing segment in wealth management.
Ryan Morfin:
Yeah. And that’s interesting. And I think it’s going to be very interesting, like the Goldman, United Capital deal, how the private wealth guys at Goldman interact with, we’ll call it the independent arm United capital. It’s going to be interesting to see how that integration works. We’re watching that very carefully to see if the wirehouses can convince the independent minded folks to tuck back into another wirehouse. So it will be fascinating next six months, I think for those folks in New York.
Peter Dorsey:
Yeah. I’ve been watching that very closely as well. I think all of us are, and it’s fascinating actually to watch. You grab your popcorn and you kind of say, I can’t wait to see how this movie is going to end. But I look at someone like a Raymond James, they’ve kind of already proved that omni-channel model doesn’t necessarily cannibalize. So what that means to advisors, to the independent advisor is, in my mind, the implication is you got to pick up your game a little bit and you’re going to have to think about different ways to bring value to your high net worth families. So there’s my two cents on that. I don’t think it necessarily will cannibalize their existing broker business.
Ryan Morfin:
And how does TD think about this kind of Race To Zero fees on someone stock trading for folks going online, and the industry is followed, right? Versus what the advisors have to pay in terms of ticket charges. How does that no fee environment on one side foot with the conversations you have with advisors that are coming over to the platform because of the assets on that side.
Peter Dorsey:
So when you look at kind of a legacy Wall Street model, and I’ve done this because I’ve looked at and gone online and looked at their fee schedules, and they’re drastically different than what you would get in an ebroker environment. My personal opinion on this Race To Zero is it actually muddies the water of transparency, because just because the end client necessarily doesn’t see the ticket charge or the fee, doesn’t mean that it doesn’t cost them something. So it’s out there and the industry, at least from a ticket charge perspective in many places has gone to zero. Some have held the line, but the majority of folks are moving. We certainly did. And what I say and what I hear from advisors is it actually muddies the water. So they have to go through and explain to clients, well, how are these firms making money? And if you’re not making money, how can you support my business and reinvest, and how are my assets safe and secure?
People have to make a reasonable profit. So you look at, in one of the examples that I use with a lot of advisors when we’re having this conversation, is these firms, they have to monetize things. And it’s just like Facebook as an example, you think it’s free until you realize that whatever social media platform, you think it’s free, but they’re monetizing and selling your data all over the place. And so just because you don’t see that cost, doesn’t mean you’re not paying for it in some way, shape or form.
Ryan Morfin:
Yeah. No. And the evolution of the pricing model, I mean, is still very dynamic. I mean, where do you see the pricing model for RIAs and broker dealer advisors going? I mean, how do you see the pricing model evolving in the future, I guess?
Peter Dorsey:
Yeah. Look at this. So we publish on a semiannual basis through one of our subsidiaries called the FA Insights. We do a benchmarking study. And what we have seen is that the advisor fee, at least in the RIA space and the independent registered investment advisor space hasn’t moved that much. I think on average, if you look at across all of our entire business, it’s about 89 basis points. I could be wrong, but it’s pretty close to that, give or take, and it hasn’t moved that much. And so when we go out and we do these consulting agreements with these advisors, it’s one of the biggest questions that we get asked. And our answer is always this, which is, you don’t necessarily have to lower your fee because that’s going to just cut into your business and your margins forever.
And once you do that, it’s also very difficult to go backwards. We have seen a handful of firms actually raise their prices, which is a whole another topic, which I’m happy to discuss. But I don’t see it moving all that much, but what I do see, the pressure coming in is if you are an advisor and you’re sitting there and your value proposition is tied to investment management and maybe some light financial planning, you’re going to have to add a lot of services because it won’t happen overnight. But I think as long as the independent advisor can constantly add services to the high net worth families, I think that the fees that they’re charging can remain relatively stable.
Ryan Morfin:
That’s very interesting. So are we moving more to like a Singaporean, like family office, private bank model? Is that where you think the industry’s going?
Peter Dorsey:
It could, and that might take some time. If you look at the demographics, the average age of an advisor is about 58. So I don’t know if those folks are going to change overnight, but we do see some newer pricing models emerging. And so some of the brightest advisors that I’ve talked to, it’s not really an asset game anymore. If you kind of look at the problems that a high net worth family has, it’s a balance sheet approach. And that shift goes from just managing their assets to managing their assets and their liabilities. So that’s something that I’ve seen, not a lot of people do, but some of the brightest people that I come in contact with, I’ve heard that over the last couple years, which is, I’m not interested just in managing your assets, I want to manage both sides of the balance sheet. And there’s been, I think, rumors out there for a long time going to a flat fee and a kind of a consulting agreement.
I haven’t seen a lot of that at all. People are, for the most part, sticking to the traditional piece schedule of assets, but you can’t really tie your value proposition to that anymore. But we are starting to see, again, those folks shift from an assets only approach to more of that balance sheet type of approach, where they’re looking at your liabilities and your debts. What does your mortgage look like? What’s that interest rate at? And not to mention, where the interest rates are, the 10 years at. I don’t know where it is today, but give or take, around 150 basis points. Where’s your mortgage at? It’s probably not very high if you haven’t refinanced, and can you go out and outperform that? Those are the type of conversations that we see some of the more successful advisors having.
It’s not just performance. That’s important, but again, end clients, for the most part, don’t leave advisors because of performance, they leave them for a couple of other different reasons, which again is a whole another topic.
Ryan Morfin:
So in this new environment that we’re in, I think people are falling into one or two categories. They’re either really actively executing on a digital marketing strategy to pick up new assets and leads or they’re sitting on the sidelines. What are some of the best ideas or kind of the thought leadership you’ve come across in your conversations about getting back into the game for advisors?
Peter Dorsey:
Yeah. Well, I think whether folks like it or not, I mean, you and I are doing this over a Zoom call, which is great. But I think this does have an implication. The whole shelter-in-place has had a massive implication on this business and nobody asked for it. But I think one of the outcomes of this is it’s going to relinquish the myth that clients, they actually want to see you in person, they don’t necessarily need to. I think for the most part, what I’ve heard from advisors is, their end clients, they’re happy to meet with them in person and in many cases, they find that to be more convenient, which leads to the implication, if I was an advisor and I’m not, but if I was, is you can use technology like you and I are doing right now to capture prospective high net worth families that aren’t in your zip code, or quite frankly, aren’t even in a 30 minute drive of your house, and start to use these digital tools to go out to acquire and acquire at a low price point, so it doesn’t cost you a lot of money to bring in new folks.
The second thing that I would say on this in general, it’s hard. It’s really, really hard to grow a business. And what I would say is some of the more successful firms that I’ve seen, they’re in the business of not necessarily pursuing the next high net worth family, but they have a value proposition that’s so strong that they’re attracting people. And so when you look at this in a sense of, you’re not chasing the next prospect, which I’m sure a lot of you folks who are listening to this do, you need to think differently about that. You need to think about, why am I always chasing a high net worth family? I need to start to rethink my business, and how do I attract? The power of pull. And that starts with your value proposition and kind of how specific you can get, what you want your ideal client profile to look like.
I get it. When you start a business, people are willing to hire you. You’re going to take them, but as you get more mature in your business, it’s okay to be a little bit more selective and have that ideal client profile so specific that you attract people instead of going after them.
Ryan Morfin:
Well, and you mentioned something there about building your book into an ideal business versus a practice. And what are your thoughts about the MNA of these RIA businesses? Do you think there’s going to be a-
PART 2 OF 4 ENDS [00:22:04]
Ryan Morfin:
The M&A of these [RIA 00:22:01] businesses, do you think there’s going to be a forward-looking downward repricing of RIA assets? Do you think it’s going to stay the same as it was in 2019? What are your thoughts on how people are looking at valuations today?
Peter Dorsey:
Yeah. Valuations they’re not going down, they’re definitely going up. And it’s kind of what you talked a little bit, [inaudible 00:22:22] in the [inaudible 00:22:23] space, there’s a lot of buyers and there’s not a lot of sellers. And so, it doesn’t really take an economics major to do the math on that one. The prices are going high, so evaluations are definitely… They’re frothy right now, and it’s… A lot of people are attracted to that for sure, and it’s super important. The other thing that I would just implore people to look at is, valuation is obviously important, deal structure is really important too, are you getting a hundred percent cash? Probably not. Are you getting 25% cash and 75% equity? Maybe.
But that’s really important too. And I think it gets overlooked a lot because people get tied into this, my multiples is this, my top line is this, and if I just do this multiple this is what my business is worth, and it’s absolutely not true. I can look at two businesses of say $200 million in AUM, both doing similar top line, and value them very differently, just depending upon the demographics of the end client, how many clients they have, there’s a lot of variables that go into that. And so, when you look at those two businesses and they’re both doing the same top line revenue, and one has an average client that’s 48, and the second business has an average client that’s 68 or 78, smart sellers are going to realize that, they’re really going to dive into that, and it is going to push down the level of business B in relation to business A, because they have different demographics so they have fewer households. So, a lot of people overlook that.
Ryan Morfin:
Yeah. I know, it’s definitely the composition of expense structure and then the end client book is really showing to be a wide variance of evaluations [inaudible 00:24:15]. One other question for you is about, when you’re building out that book and you’re building out that business, can you maybe talk a little bit about the importance of that second generation and succession planning for that kind of depth of bench?
Peter Dorsey:
Yeah, really important. So, when we look at the talent in RIA space, and this goes back to Wall Street who’s playing into this game now too, there is a massive war for talent and trying to attract and retain top talent. And so, when you… If you’re a typical advisor and let’s just say you’re 68 years old, some of the junior advisors, if you will, they may not have the money to necessarily buy out some of the senior partners. So, we have seen some lending, some outside lending sources come in to lend to those junior level advisors to kind of buy out the succession, because there are a handful of firms who don’t want private equity, they would prefer to keep the ownership structure intact and keep it within the advisors and the employees that built that firm, it’s really important to them really as a core tenant.
But it’s something that we will pay a debt as an industry if we really can’t figure that out, because I think there’s a massive need, and I think a lot of the junior advisors that you talk to, they want to be able to do this, is just that they can’t afford it. Because they’ve built this business pretty successfully over 10, 15 years, and so if you started at that firm when you were 25 and you’re now 40, you’ve seen massive growth, in terms of organic growth, maybe an acquisition or two, the market certainly has appreciated, so the values have certainly risen.
But you’re 40 and you might have a kid or two, and you might not have a couple of hundred dollars burning a hole in your pocket to buy out some of these firms, and it could be more than that. So, we are starting to see that, and it’s something that I think as an industry we really have to figure out because there’s of course certain amount of private equity, but there’s only a fixed amount that can go around in that sense. So I think we really have to figure that one out as an industry and figure out how we can kind of pass that baton on internally.
Ryan Morfin:
And there’s been some recent changes to the industry with the launch of Reg BI, how are you guys looking at that? And what kind of changes do you think are on the horizon, not only operationally but also from a regulatory viewpoint?
Peter Dorsey:
Yeah. I mean… So that just went into effect literally a couple of days ago, right? At the end of June. And so, I heard a really interesting statistic that I think there’s, I don’t know, roughly 12,500 or so SEC registered firms on our platform, speaking alone, I know that a lot of firms by the deadline hadn’t gotten their paperwork back into the SEC. So, we’ll see what happens there. But I think it’s been interesting to watch this play out over the years probably decades, from the initial suit of the Merrill Lynch rule, to the DOL, which died on the vine, and now you have the Reg BI, and Reg BI is now here to stay. So ultimately, my opinion is, it’s really good for the investing public that we finally have something, is it perfect? Absolutely not. Is it better than nothing? No question.
Ryan Morfin:
Yeah. No, it’s… I think transparency on fees is just going to force the client communication around value and value as services to become more critical going forward. What are some best practices around that?
Peter Dorsey:
Yeah. I think it’s not just that it’s… One of the core tenants of Reg BI, is to put common language that your average person can read and more importantly can understand. Because if you look at some of these investment policy statements quite frankly, and if you look at some of the product disclosures when you mail out whether it’s a mutual fund, an ETF, or God forbid, an alternative, they can get complicated. And… So I think having that tenant in there for Reg BI to say, “I’m going to explain how you’re paying me and some of the third party providers, and I’m going to do it in a way that’s in plain English so someone outside of this industry can actually understand the associated fees and costs with these products that they’re paying,” I think it’s good thing.
Is it perfect? No, it’s not. I mean, I think Reg BI could have gone a little bit further, it didn’t. But overall, it’s really good. And I think that’s one of the largest best practices for advisors, is to have that… Whatever you have, it needs to be documented, and that’s probably number one. Number two, it’s got to be in plain English. And you got to have policies and procedures in place, so when you, hopefully don’t, but if you do inadvertently violate Reg BI, what are your policies and procedures and how are you going to do that? Is going to be super important and something that I think will be looked at when the regulators eventually come knocking at your door.
Ryan Morfin:
So, as you guys are looking at the business and managing your team as an executive from TD, how has the way you guys do business and transitions and business development, how has that changed for TD? How are you guys kind of leading the change from your perspective?
Peter Dorsey:
Well, when this started… Let’s just make the math easy here, and say it was six months ago that we all started to kind of shelter-in-place, a little less than that. But, we kind of went and always kind of have led with an associate first kind of mentality. Because, the way I look at it is, and some people disagree with this, but that’s okay, the associate always has to come first, your people have to come first. A lot of people say, “No, the client has got to come first.” But, if you focus on your people, your people take care of the customers, and then the customers take care of the bottom line, the output, which is your revenue, your top line, your profits. So, we’ve done some things that I think are pretty unique in the industry, which is, we went to a work-from-home environment, it took us… We have well over, I think we have 1100, 1200 people, most of whom because we’re a regulated entity like most of the folks who are listening to this, they go into an office every single day.
And we went to a work-from-home, I would say it took us about a week, and that’s being really conservative, it probably took us less time. And even folks that you would traditionally think couldn’t work-from-home like our trading group, we had them all working from home and we have the technology to do that. I would say, our CSI scores, our Net Advocate Scores, they’ve been stable to steadily rising. And so, as we kind of look at, do you go back to work? What does your return-to-office strategy look like? We’ve said, “Listen, we’ve got to put the health of our associates first and we’re going to continue to work-from-home.”
The second thing that I would say on this because I’m sure it’s on everyone’s mind is, if we do return to the office, what does that look like? What is our policy going to be like? I mean, when you have a client come in, do you have to wear a mask? Do you have to restock the office with different partitions to make sure that people can keep that social distance? And in fact, we did a study, we released it yesterday, on a survey kind of saying, if you’re an advisor, what is your return to office strategy? And we said, we read that 65% of the RIAs that we surveyed, are already back in the office in some way, shape, or form. And if you include the people who intend to return to the office in the next 30 days, that number jumps up to 80%. So, only 3% of the people we surveyed, do not plan to go into the office ever again. So, the overwhelming majority of advisors are back in the office in some way, shape, or form.
Ryan Morfin:
And that’s interesting, is that 65% everybody, all the staff, is back full-fledge?
Peter Dorsey:
No, it’s not. So that’s an important differentiator, it just means that they are in the office in some capacity, it could be part time, it could be rotating staff so you have an A group, you have a B group. I’ve seen some advisors do that before, they have separate entrances, and the A group sits on this side, and the B group sits on this side, it gets cleaned regularly. But, it’s just… That’s 65% is just in some way, shape, or form, certainly not full-time.
Ryan Morfin:
Yeah. No, it’s going to be interesting to see how… The genie is out of the bottle, if you require everybody to come back. I mean, we’ve told everybody on our team, “You can stay probably home until Q1 of next year, if you need to, if you want to.” But we’re testing our employees if they want to come back, and trying to make it a clean zone and a safe environment so that they feel there’s some confidence level that they’re not going to catch it while they’re at the office. But, I think taking care of your people is critical. I think it’s good business, like you said, and it’s really a differentiator. Because there’s a lot of companies who haven’t been doing that, and…
PART 3 OF 4 ENDS [00:33:04]
Ryan Morfin:
There’s a lot of companies you haven’t been doing that and their employees are looking … Because I think healthcare outcomes are a lot more important than economic outcomes, especially … Unemployment was really low before. I mean, I don’t know if it is really hit the white collar portion of the economy yet, but a strong economy where there’s not a lot of unemployment, if you don’t treat your people right, they’re going to find a better outcome.
Peter Dorsey:
Yeah, no question. And you have to, I think be considerate of … You and I are roughly the same age. I would assume in pretty good health, but yet you can’t make that assumption for everyone. Every family that you employ has a different responsibility. They might have elderly parents living with them. They might have children with asthma. You just don’t know. I kind of have to trust your people and manage to that. If you have a problem with that, in managing your people, you can deal with that in a couple of different ways, whether it’s giving them better technology or better training and holding them accountable, but you really have to give them that choice because everyone is in a bit of a different circumstance.
And so we looked at this and said, listen, if we want it to go back tomorrow, if there was a vaccine today and we could vaccinate everyone within the next week, it would still take us probably 60 to 90 days to get back into the office because as a large organization, we’re still going to have to make some adjustments within our office space, whether it’s restocking the facilities, creating more social distance between some of the open floor plans and cubes, replacing some of the old traditional kind of cloth barriers with glass, so that can be washed and disinfected. Even if we wanted to and could go back tomorrow, it’s going to take us two to three months anyway.
Ryan Morfin:
Yeah, no, it’s going to change definitely people’s appetite for commercial real estate. I think the wirehouses are starting to evaluate if they need to have all that real estate for these advisors, because the productivity is still up. One question I have for you as it relates to the wirehouse advisors, from a business development standpoint, have they on average been waiting for things to kind of find a new steady state or are there a lot of movement in the pipeline and is it still a very active period for transitions?
Peter Dorsey:
Yeah. I mean the transitions have been pretty active. We continue to see them on a fairly regular basis from wirehouses, and from the independent BD space. So it really hasn’t slowed down. I mean, it did get, quite frankly, if you had asked me that question in like April, I’d probably say, yeah, it’s … People are a little bit shaken by that, but obviously the market bounce back and sort of people’s confidence in their ability to move. So we haven’t really seen too much of a slowdown in the interest of people wanting to go independent.
And again, people move for a lot of different reasons, but the common threads are they want control, they want equity. They feel like in the wirehouse spaces, they manage from a compliance standpoint, the lowest common denominator. They’re very restrictive from a compliance standpoint, I get it, I hear it all the time and I’m not picking on any one specific one. It’s just they’re large businesses with tens of thousands of advisors and they kind of have to do that. I get it. People are essentially getting tired of that and those secular trends, they really haven’t changed all that much. We’ve been fortunate that the interest has been pretty steady and the trend towards independence.
Ryan Morfin:
Well, I guess I’d ask a few final questions. One would be, what is your view on the U.S. economy? Is it a V shape? Is it a swoosh? A W? Great depression? What are your thoughts on where we’re going?
Peter Dorsey:
I don’t know if you want to listen to my thoughts because I’m by no means an economist or a market forecaster, but my own uneducated personal opinion is it’s hard to be super confident in the market after, call it a 10 year bull run. And there’s just so many factors and variables that just … I mean, who put a worldwide pandemic into their back test of their forecasts? It just didn’t happen. And there’s just so much, whether it’s the shelter in place, whether it’s geopolitical unrest, I don’t know.
The one thing I’ll say is that in the longterm it’s always been a bad bet to be a bear on the market. Longterm, that bet has never paid off. So I would say the short term, I really don’t know. Longterm, I’m pretty optimistic. I think overall, as I look at a lot of the FinTech spaces in my space, and when you listen to really smart advisors who look at other industries, they’re super positive on the economy longterm, no question about it.
Ryan Morfin:
Yeah. What books are you reading to stay on top of the industry, on top of the markets? Who are some of the thought leaders you follow and kind of how are you handling maybe this extra time at home since you don’t have to travel?
Peter Dorsey:
Yeah. I’ve definitely replaced my plane flights with reading some books. I’ll run off a couple, if you haven’t read it, I’m sure you have. Principles by Ray Dalio was just unbelievable. I mean, just his personal story and the way he runs the business, super unique. I love that one.
Non-business related, right now I’m reading Sapiens, I’m about three quarters of the way through it by Noah Harari. That is a blow your mind book. It is a very, very big picture and a history, quite frankly, on human evolution for the last 2 million years. I can’t put it down. I’m about three quarters of the way through it.
Another one that I picked up because actually an advisor who I really respect said, you should pick up High Performance Habits by Brendon Burchard. That book I’ve started, so I still have those two books going right now. The High Performance Habits book is … I mean, I’ve read a lot of these kind of self-help, kind of how to run a better business type of book. This one is good. It’s long. I just started it. So I’m only, I think one or two chapters into it, but I can say so far, it’s really, really good.
Ryan Morfin:
That’s fantastic. Well, I appreciate you coming on the show. I’ve read the Principles and Sapiens, but I’m definitely going to pick up High Performance Habits. We’d love to have you come back on in a few months as this kind of continues to evolve and have a conversation about how things are continuing to play out.
Peter Dorsey:
We’d love to do it. I appreciate the invite. Honored to be here.
Ryan Morfin:
Thank you so much. Have a great day.
Peter Dorsey:
Do the same. Thank you for watching Non-Beta Alpha. And before we go, please remember to like, and subscribe to us on Apple podcast or YouTube channel. This is Non-Beta Alpha, and now, you know.
Speaker 1:
All price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published, or reproduced in whole, or in part. The information contained in this podcast does not constitute research or recommendation from Non-Beta Alpha inc, Wentworth Management Services LLC, or any of their affiliates to the listener. Neither Non-Beta Alpha inc, Wentworth Management Services LLC, nor any of their affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast. And any liability, therefore, including in respect of direct, indirect or consequential loss or damage is expressly disclaimed. The views expressed in this podcast are not necessarily those of Non-Beta Alpha inc, or Wentworth Management Services LLC, and Non-Beta Alpha inc, and Wentworth Management Services LLC are not providing any financial, economic, legal, accounting, or tax advice or recommendations in this podcast.
In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Non-Beta Alpha inc, or Wentworth Management Services LLC, to that listener nor to constitute such person, a client of any affiliates of Non-Beta Alpha inc, or Wentworth Management Services LLC. This does not constitute an offer to buy or sell any security. Investments and security may not be suitable for all investors. And investment of any security may involve risk and the potential loss of your initial investment. Investors should review all risk factors before investing. Investors should perform their own due diligence before considering any investment. Task performance is not indicative of future results. Investment products, insurance and annuity products are not FDIC insured, not bank guaranteed, not insured by a federal government agency, may lose value.

Share This Episode

Subscribe To Our Podcast!

COPYRIGHT 2020 ALL RIGHTS RESERVED. THIS DOES NOT CONSTITUTE AN OFFER TO BUY OR SELL ANY SECURITY; INVESTMENTS IN SECURITIES MAY NOT BE SUITABLE FOR ALL INVESTORS. AN INVESTMENT IN ANY SECURITY MAY INVOLVE RISK AND THE POTENTIAL LOSS OF YOUR INITIAL INVESTMENT. INVESTORS SHOULD REVIEW ALL “RISK FACTORS” BEFORE INVESTING. INVESTORS SHOULD PERFORM THEIR OWN DUE DILIGENCE BEFORE CONSIDERING ANY INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INVESTMENT PRODUCTS, INSURANCE AND ANNUITY PRODUCTS ARE NOT FDIC INSURED/NOT BANK GUARANTEED/NOT INSURED BY A FEDERAL GOVERNMENT AGENCY/MAY LOSE VALUE. SECURITIES OFFERED THROUGH CABOT LODGE SECURITIES, LLC [CLS] MEMBER FINRA / SIPC 200 VESEY STREET, 24TH FLOOR, NEW YORK, NY 10281, 888.992.2268.

Recommended For You

The effects of COVID- 19 on Universities, student housing, and the quality of learning for students W/ Brian Nelson President & Founder of NB Private Capital

The effects of COVID- 19 on Universities, student housing, and the quality of learning for students W/ Brian Nelson President & Founder of NB Private Capital

    The effects of COVID- 19 on Universities, student housing, and the quality of learning for students W/ Brian Nelson President & Founder of NB Private Capital Share This Episode Recommended For YouWant to join our...

read more
Section 1031 of the Internal Revenue Code during this political season W/ Mitchell Sabshon CEO of Inland Real Estate Investment Corporation

Section 1031 of the Internal Revenue Code during this political season W/ Mitchell Sabshon CEO of Inland Real Estate Investment Corporation

  Section 1031 of the Internal Revenue Code during this political season W/ Mitchell Sabshon CEO of Inland Real Estate Investment CorporationRyan Morfin: Mitchell, welcome to the show. Thank you for coming on. Mitchell Sabshon: Ryan, thank you so much for having...

read more

Want to join our show?

Would you like to be a guest on the Non-Beta Alpha Podcast? Please click below and let us know that you are interested in being a guest on the podcast and we will get back to you shortly.

Skip to content