Building a Teambased Enterprise 2012 National Conference ACR88571

Building a Team-based Enterprise 2012 National Conference ACR#88571

Enterprise Momentum Growth Opportunity People For internal use only. Not for public distribution. 2012 National Conference

Growing Into An Ensemble When is the right time to hire an advisor? Structuring client service towards a team based model Choosing the right professional Technicians Service advisors Lead advisors Business partners Do they have to bring clients and revenues? Can they have equity? For internal use only. Not for public distribution. 2012 National Conference

Panelist Introduction David Berman, CFP, CLU Principal Berman Mc. Aleer Bernard Wolfe, CFP Chairman and CEO Bernard R. Wolfe & Associates, Inc For internal use only. Not for public distribution. 2012 National Conference

Firm Overview’s Berman Mc. Aleer $500 million in individual client assets under management core business $350 million in 401 k assets 17 employees, 6 advisors, 3 owners(1 more buying in beginning of 2013) Bernard R. Wolfe & Associates, Inc $500 million under management 7 employees, 3 advisors, 2 partners (1 more on track) For internal use only. Not for public distribution. 2012 National Conference

Agenda 1. History and Major Milestones 2. Partnerships 3. Growing Professionals For internal use only. Not for public distribution. 2012 National Conference

1. History & Major Milestones

History - BM Were friends and roommates with Joe Mc. Aleer Often talked about being partners Careers diverged for 10 years before the time was right to merge and form Berman Mc. Aleer, Inc Rejected the “date before you get married” model and took the leap of faith From the beginning set it up as 50/50 Real business expenses Same salary for both David brought all the physical space and equipment From that moment on, everything was equal NO tracking of individual sales Put the firm name on everything For internal use only. Not for public distribution. 2012 National Conference

The Business Model - BM “Painfully expensive business model” Multiple professionals involved Many, many hours devoted to each client Can only work with very high wallet-share and high minimum account Can only bring in 8 -10 new clients each year as a firm – cannot accept more due to the model The model is extremely rewarding to the owners when the firm is growing and productive due to leverage and capacity Vulnerable to “bad times” Got through the crisis without reducing staff salaries or laying people off Owners experienced drastic decline in income For internal use only. Not for public distribution. 2012 National Conference

Dual Advisor Model - BM Early on were frustrated with the capacity limitation of doing everything Original idea was to have a lead advisor and support advisor Joe and David were the lead advisors The model created capacity and leverage but still over-emphasized the lead advisor. Still dependent on Joe and David Patrick, Drew and Melanie were called “relationship managers” The dual advisor model involves two advisors in every relationship Patrick, Drew and Melanie started being called “Advisors” Emphasized the role of the second person Defined specific responsibilities Relationships will vary by client Keep reinforcing the team Ask clients to send e-mails to both of the advisors For internal use only. Not for public distribution. 2012 National Conference

History - BWA Professional hockey player Needed plan for after hockey career Opened firm in 1981 Acquired by NFP in 2001 Security for family Recognition of value after 20 years Made Brad a Principal Switched from commission-based to fee-based in 2005 For internal use only. Not for public distribution. 2012 National Conference

2. Partnerships

Who Should Be A Partner Firm Criteria Individual Criteria Buy-in For internal use only. Not for public distribution. • • Are we ready to have another partner? Will income be diluted? Will control change? What other partnership events are pending? • Contribution • Character • Management skills • Valuation • Funding • Compensation changes 2012 National Conference

Structure of the Partnership - BM We spent considerable time and money on a detailed partnership agreement that has never been referred to since Belief and faith have a big role in a partnership We have had routine disagreements but never to the point where we were not sure if we will continue to be partners We changed roles in how view spending Every time we try to make a decision we look at honoring the three values of the firm which apply to all constituents of the firm – clients, owners and staff: Trust Respect Fulfillment For internal use only. Not for public distribution. 2012 National Conference

Structure of the Partnership - BWA Always responsive to business needs – truly have “owner” mentality Brad and Bernie set employee bonuses together based on employee’s contribution No formal business plan – Bernie and Brad drive revenue Goal is to make Samantha a Principal For internal use only. Not for public distribution. 2012 National Conference

3. Growing Professionals

Large Firms Make People a Priority Source: 2012 Advisor. One Top Wealth. Manager Survey For internal use only. Not for public distribution. 2012 National Conference

The People - BM Highly qualified and credentialed people Hired Patrick from Merrill Lynch with no business development expectations Now co-manages $220 million of client relationships Looks for people who can’t or don’t want to reach critical mass building their own book or already have experience managing relationships The team model makes it practically impossible to leave the firm and takes clients with you “Our approach seemed like the logical thing to do. We always wanted to be the professional’s professional” We wanted to model ourselves after the best law, accounting and trust firms For internal use only. Not for public distribution. 2012 National Conference

Professional Development - BM Very individualized professional careers With Drew it was purely a matter of time for him to get some experience Our model is not inherently scalable Process and systemization not always realistic in this model For internal use only. Not for public distribution. 2012 National Conference

The People - BWA “Team Culture” – share in the good times and the bad. “Take care of our people” Low turnover – high level Operations and Compliance staff member since 1988 Company pays 100% of health care, parking and other perks Hire people with potential, not for instant gratification Entire team on salary supplemented with bonuses Associates starting to become vital piece of future Every employee, including staff, has same opportunity to advance For internal use only. Not for public distribution. 2012 National Conference

Professional Development - BWA Looks for “personality”, can teach everything else Up to individual – Brad developed and gained respect on his own Be patient, no business development expectations. Took 810 years for Brad For internal use only. Not for public distribution. 2012 National Conference

Thank you!