How Hybrid RIAs Can Position Themselves for the Future and Attract Top Talent with Jeff Gonyo

Jeff Gonyo  00:25

Thanks for having me.

Douglas Heikkinen  00:27

It's a very different landscape out there for an advisor. Can you set the table for us to get started? What are the different options available to you if you want to manage-manage client assets?

 

Jeff Gonyo  00:39

Yeah, it's a, it's a good question. And it has changed. You know, I started in the business in 1993. At Merrill Lynch as an advisor. And at that point in time, you know, you either worked for a wire house, potentially a bank, that was about it. The idea of Independence and the raa space was out there, but had not emerged. And over the years, you've seen a trickle of people leaving the wire space, going into independence, and that became a flow. And, you know, I call it a sea change, actually. And so today, the options are very different, you still could work for a wire house firm. And I think at Steward, one of the things that we've done very well is help liberate some people from the wire house firms, gain their own independence and do it with infrastructure behind it. The independent space is the growing option that's out there. And independence can be different, right? It could be owning your own business, under a custodian like Raymond James, it could be under a group like Wells Fargo, or it could be under an IRA firm. And so I think, Independence and RIA get commingled, and in the terminology, quite a bit, not necessary, exactly the same thing. You could be RIA only. And I'd say that that is also a growing trend that's out there. So in the landscape, of where you can manage client assets, the big institutional firms still exist. I don't see them going anywhere, their their modeling and their culture, I think has changed quite a bit. That's created a huge opportunity in the independent RIA world that we live in today.

 

Douglas Heikkinen  02:29

So obviously, you think Steward Partners is a very attracted option for an advisor. What's the big overarching reason for that in your mind, let's go macro right now.

 

Jeff Gonyo  02:41

You know, I, the first word that comes to mind is entrepreneur. Having been in a wire house environment, you know, I worked at Merrill Lynch for 10 years, I was a manager, I was an FA and a manager at Smith Barney and Morgan Stanley for 13 years to follow. And the shift to independence for me was eye opening. And I think what is really appealing for advisors right now is the business feels like it's been pushed into a box. Some of that's regulatory, some of its the firm that they're working with. And a lot of advisors are frustrated with the nose that they get, you know, they want to come up with creative marketing ideas. They want to do things like podcasts, but they're restricted limited from the parent company. And I think that just goes back to managing to the lowest common denominator. If you had 15,000 19,000 advisors, it's harder to do. But it steward, one of the things that we've done is we've said, Okay, let's rip the lid off the box of all the things that you get told no about. It has to be compliant. We care about that part of the business deeply. But it's really allowing people to kind of rediscover what they were passionate about in business, finding new ways to grow the business. marketing media is a really good example. But I think it's also in the product toolkit. Having the ability as a hybrid firm. We are an RIA, were last year ranked as number 19 in the country by Barron's, that should go up this year based on our growth. But I would say it's having that ability to be consultative and really managing to the AUA, not just the AUM.

 

Douglas Heikkinen  04:25

Are there different options available to an advisor to be here at Steward or is there one size fits all?

 

Jeff Gonyo  04:33

You know, I think it's certainly not one size fits all. What we're looking for is the right fit. And I think that's what distinguishes us from a lot of our competition and our peers. is, you know, Steward we started 10 years ago as really a W2 firm where uniquely you owned your book of business, you were a shareholder as well and you had a say in the organization. 2019 came along and we realized we were missing a lot of opportunity in the 1099 space where somebody could truly be independent under their own brand and operate that. So we incorporated that into the Steward repertoire, if you will. And then just this past year, we had our first true m&a deal. So, you know, we have, it's, it's whatever fits for you, what we want to find is where you're going to be able to flourish in your business. And our growth is your growth. So we have every option available on the table.

 

Douglas Heikkinen  05:32

Of course, one of the big deals here is equity ownership. That's a such a unique opportunity for a firm.

 

Jeff Gonyo  05:40

It's a game changer. And but it's been the hallmark of what we've done since day one. And so every single partner, no matter how you affiliate, is an equity owner at Steward. It's part of the deal. So I'd say we have competitive a cash package to join the firm and transition is anybody on the street. But what we have that's different is the equity. And what's very special about the equity, there's a vesting schedule, and it's usually coterminous with the deal. So for somebody who's an equity owner, after you hit the T 12 revenue that you're brought over at or hired at, you are now partner and participant and profit sharing of the firm. So 70%, this is via operating agreement, 70% of all of our positive cash flow out of that business at the end of each year, gets distributed on a pro rata basis to every single partner. But it goes beyond when I say this, I think most people consider that just to be the advisors. It's not, it's their assistants, we call them client administrative managers. When they join, they're an equity owner, if you're in compliance operations, or any other department that that helps serve the firm, you're an equity owner, every member of our Board is an equity owner. And what that brings together is not just the uniqueness of ownership, but a key word called alignment.

 

Douglas Heikkinen  07:05

There seems to be a good marriage of talking about the way business was at the wire house where they came from, and where they are now. It's an it's a nice way to not bring everything new, but bring some of the old with you as I'm talking to people, I keep getting that feeling.

 

Jeff Gonyo  07:26

Yeah, it's it because I think it's true, I think, when we started Steward, and it's going back to conversations with our CEO, Jim Gold, early on. What we wanted was to create an environment where if I'm going to have a cookout at my house on a Sunday, I'm going to be very comfortable inviting anybody in my office over, even if I have clients there. So it was really kind of getting back to that spirit of camaraderie. And going back to the equity ownership, every single person at Steward has a stake in each other doing well. My growth is your growth, your growth is my growth that matters. And so what you get is a lot of collaboration. And so advisors, you know, miss those days of being able to share ideas. Now they look at the door next to him. And oftentimes, that's their competition. And so I think we've broken down those barriers, and given people a place to call home, and one that they're happy to participate in and help grow the family.

 

Douglas Heikkinen  08:28

Yeah, it's it's an interesting, as I'm doing these interviews today, it's the light came on of what you've really created, that the old world isn't necessarily a bad thing. You've just changed the old world into a new thing.

 

Jeff Gonyo  08:43

Yeah and, you know, I'm not, I'm not sure if it's old or new or but it really is, people are seeking something that's better than themselves. And one of the, Scott Danner who just joined our firm recently with Freedom Street, I think he calls it better together. And I think it's a really terrific way to phrase it and put it because that's how we see each other. And I would say that goes beyond just the advisors. The cams that come in, the assistants, the staff that join, they have a say, they're part of something different too. They have an opportunity to grow wealth. And it goes throughout the entire organization from the board on down and I'll continue to go back to alignment and what happens when you put all of those things together is this thing called culture happens. And a big firm or a firm can't create culture. They can ruin it, but it's the people within that create the culture. Every person at Steward is part of the stitching and the fabric, that makeup Steward Partners.

 

Douglas Heikkinen  09:52

Organic growth is the big buzzword in the industry this world. Talk to me about both organic growth and inorganic growth. and how they're achieved at Steward Partners.

 

Jeff Gonyo  10:02

Yeah, we'll start with with organic. You know, again, one of the things that's that's very unique about Steward is we created this W2 model where everybody owns their business. So and we have a very simplified comp structure. So it's it's one sentence long, why all of that matters is because we're not going to be driving product, we're not going to be telling you what to do how to do it, we're bringing you on as partner, and we trust you as a business owner. So you've opted in, and we have a shared responsibility. So for every team that's going to be somewhat unique and dynamic to their own skill set what they like to do. But what we've done is we've made sure that we've put together a platform and a tool chest that's bigger than where they were. And so for some people that might be marketing and media, right, we have people that have written books that have podcasts that do it weekly, they have a different way to engage with their client base. We have also brought in a Chief Information Officer, we've brought in a Chief Product Officer. So we've expanded the technology that people can use to help them with their business, whether that's helping them grow in some other way, or whether it's just finding efficiencies in their day to day tasks. In the product set, we have two terrific custodians, we work with Raymond James and Pershing. But what we realized is that one platform in one place doesn't always give you everything you need. And I think that's true of any single custodian. And so bringing in very talented Head of Product, Frank McDonnell, we've been able to expand that, and go deeper on our product offering go higher upstream with some of the options that we have with alternative investments, structured notes, things of that nature. So we've enhanced the platform, we've enhanced the tools around it. And we've enhanced the way people can get themselves out and market it.

 

Douglas Heikkinen  12:01

How are you and the team setting up the firm for the next generation of advisors and investors?

 

Jeff Gonyo  12:08

It's, well, I think the organic piece is part of that. The question I didn't answer is the inorganic piece, but I think it dovetails into this. The inorganic piece of what we're doing is acquisition. And that's still, like I said before, liberating our friends from the wire world, or that single custodian w two model to something that's bigger, and something that can enhance what they're doing. So I think that in turn, usually what they're doing is they're bringing their team with them, we want to make sure that there's opportunities for them to grow and develop, we've created a next gen group within Steward. And we also have committee groups throughout Steward in these are groups that have participation, with advisors, with the cams with operational people at the firm as well. And why that's important and where it gets to is it's, you know, a broad base development of what we're doing. I think the recruiting piece is one of the ways we'll help capture talent. We also, this year, we're going to be launching something called Steward Assist, which is a small household solution for advisors from a practice management perspective, that voluntarily want to, you know, maybe cut the bottom 10 accounts in their book of business, so they can focus on getting five more of their top five accounts. In that model, that is going to be a place where we can grow talent, that's going to be a place where if you've been an assistant but want to become an FA, that might be a place to do it, or somebody younger in the business that's looking to build up a book and in just hasn't had the skill set, or the desire to cold call or do those sorts of things. So we are working very hard at grooming young talent up. I think the m&a space is really a cool opportunity there as well. Because what's happening is the G1 generation wants to sell their practice. Valuations are significantly different than what they used to be. But the G2, G3 generation can't afford it. And so what we're doing is giving people kind of a bridge or a path, to be able to do that, where they can monetize at the level they want. But we can keep the team in place and put them in a position to succeed going forward.

 

Douglas Heikkinen  14:31

Do your biggest recruiting assists come from your current advisors?

 

Jeff Gonyo  14:36

Historically, they have. And if and again, this goes back to what I think is very unique about Steward and it goes back to being an equity owner. They have a stake in seeing us grow and do well. And some of the things that you've been commenting on is the like mindedness of the people you've spoken to here at Steward today. And you'll find that with the advisors around us. So if I go back historically, probably 55 to 60% of the advisor recruits we've brought in have been employee referrals. And they do, we will give them you know, a finder's fee for that and an equity grant to some degree. That's really not why they're doing it. They want to see the firm grow, and they want to do it with like minded people.

 

Douglas Heikkinen  15:24

10 years, huge growth. Is there a sweet spot for this growth, or is the floodway long?

 

Jeff Gonyo  15:32

It's it's long, I feel like we're in the first inning of a new game. You know, two years ago, we had a very big change at the farm, we had brought in a group from the west coast called Umpqua investments. And with that came introducing broker dealer. In a team that had been in place for quite a while, we have an amazing relationship with Raymond James and with Pershing. But when that occurred, we brought that broker dealer over and that opened up our doors to become more independent at the time, we were just with Raymond James. So it allowed us to bring on an additional custodian. It also allowed us to create our own external recruiting contracts, that's important to us as well. But it's allowed us to do all the other things around bringing our own chief of technology and product. It's really helped us expand who we are and become entrepreneurs, ourself and adapting and growing in this space. So when we look at where we were 10 years ago, to where we are now, we think we can double the size of the business in the next three to four. And to put it in perspective, with the equity, we've had two investments in the firm from family office groups outside of Steward, and they have an ownership stake that's no different than the rest of us. It's perfectly aligned. What was important about that is, you know, every time we've had that kind of investment, we've been able to double the size of the firm. And to put it in perspective, in 2019, when we did our first capital raise, we were probably doing 67 million in revenue, with about 8 billion in assets. And if we take a look at our recruiting project today, were targeted to be somewhere between 240 to 250 million. And if we look at our inorganic recruiting efforts this year, between the m&a space and just what we're doing and recruiting normal w two and 1099 partners that will still own their book of business. That number looks like about 65 to 67 million and about 78 billion in assets.

 

Douglas Heikkinen  17:41

It's amazing. Lastly, I see you played hockey in college, an incredibly difficult sport, and it's on skates. Who wins the cup this year?

 

Jeff Gonyo  17:54

Well it's not that hard when you grow up on the Canadian border, and you're four years old, and you learn that and so that that part, it's like riding a bike. But you know, even though I'm from upstate New York, I live in Florida these days in Tampa area, so you know, I think a good bet and a smart one would be to go with the Florida Panthers.

 

Douglas Heikkinen  18:12

Wow. Okay. Jeff, thank you so much for being with us today.

 

Jeff Gonyo  18:17

Thank you. Appreciate it, Doug.

 

Douglas Heikkinen  18:18

To learn more about Steward Partners, please visit Steward Partners.com. Please follow us for timely updates on X, LinkedIn and Facebook all at Advisorpedia. For everybody at Advisorpedia, our producer Julia Smollen, our engineer Tory Miller and the Power Your Advice podcast team. This is Doug Heikkinen.