Act 1
Our hero, Josh Brown, has worked for a series of third-tier brokerage firms in Long Island and New York City for ten years. He’s in his early twenties and knows next to nothing about stocks, bonds, his mutual funds, investments, economics, financial advice, or anything related to this profession. He works for thieves, hustlers, well-meaning ignoramuses, morally compromised men who will say and sell anything just to make the next mortgage or child support payment. He believes there is a way to run a retail brokerage business that wins for everyone – clients, firms and brokers. he is horribly wrong. In fact, it’s quite the opposite. Clients don’t win. Business cannot win. Brokers don’t win. Josh starts blogging about it. All of it. I will spare no details. An audience is formed to hear what he has to say each day.
“How do you get this out there?” another broker asks.
“Why can’t you?” comes the reply. followed by a book. Then there is the newspaper column. then resigned.
At the end of Act 1, the protagonist quits his brokerage firm, relinquishes Series 7, and vows never to sell his investments to clients again. He has nothing to show for all that time in the streets, save for a once-in-a-lifetime cautionary tale and an example of what not to do. But he’s kidding. blog brokerThere are no job openings for the 32-year-old ambitious Financial Advisor. The administration fee is approximately $0. He has to create his own work from scratch.
second act
Josh is not without resources. She has been his trusted wife since high school. An accompanying set of her in-laws who know she can if she gets the chance. She was invited to a financial bloggers convention on Coronado Island. Our hero has to borrow money for a flight and a hotel room. There he meets his idol, financial blogging authority Barry Lytholtz. Barry has the opposite problem he has Josh. He has hundreds of readers and fans who want to give him money to invest, but he is not his financial advisor. Within months, they teamed up. Josh talks to clients, Barry oversees portfolios, big pictureKris Venne comes to the office to say hello, offers himself a job, and accepts his offer on the spot. He is in charge of financial planning. Michael Batnick pitches to Josh on a Long Island Railroad train platform at eleven o’clock at night in a chance encounter. He handles investments.
A non-conforming population with less than $30 million in client assets. A joke that writes itself. “Josh Brown? The guy on Twitter? Barry on the blog?” No wise man bet on them, so they had to bet on themselves.
Their company was founded in September 2013 with approximately $65 million in assets and one custodian. Their biggest client leaves the week before the launch as Goldman is happy to provide the loan they need for their villa. It is not particularly auspicious. Together they descend from a cliff. Colleagues wish them well. I roll my eyes back.
Barry deals in real estate subleasing, payroll software, and copier price shopping. Josh is licking envelopes and creating logos. Chris wears the HR hat, the Compliance Officer hat, the Administrative Assistant hat, and spends the rest of his time doing financial planning for all accounts. Michael has started his own blog, built a portfolio, taken client calls on any topic under the sun, met with wealth management firms, and shipped physical copies of all his performance reports. Everyone does a little bit of everything, but very few are actually qualified.
They start hiring and get very lucky. Great people start joining the company, bringing their experience and enthusiasm to the table. It’s still a joke, but the joke is starting to get serious.The New York Times sends reporters to write about such methods small companies can exist In an industry that thrives on scale. The company grew from 4 to 5, from 5 to 6, from 6 to 15 people. fifteen to thirty. Fans of your company’s content become leads, and prospects become clients. Advisors who are fans become employees and bring their own clients. The company’s content has improved, moving from blog posts to podcasts, podcasts to videos, and videos to full-scale shows and live events. Exploding fan base. The customer base will follow suit.
At the end of Act II, ten years after his company was founded, he has over 50 employees, thousands of customer households, and nearly $3 billion in assets under management. The company grew organically without raising outside funding (none was offered), paying signing bonuses, making acquisitions, or hiring headhunters. Bootstrap. The client joined for the same reasons that the advisors and content his creators joined. It’s culture. It’s a rocket ship, and unlikely, it has Josh, who knew nothing, become its CEO out of nowhere. he made his own work. Jokes are no longer funny.
interlude
At the beginning of each year, my partner and I reflect on what went well and what didn’t go well in the previous year. We look at the highlights and lowlights, discuss potential areas for improvement, and strategize for the coming year. This work requires a large amount of data and analytics covering all aspects of the business. But of all these data sets collected, only referrals can accurately represent how a company is really behaving in the eyes of its clients.
Most successful companies net promoter scoreThis is obtained using survey questions of existing customers regarding their likelihood of suggesting a product or service to a friend. Customer responses are ranked in one of her three buckets: slanderer, passive or promoterYour company’s score is based on counting promoters and subtracting detractors. All that’s left is NPS. The scale is minus 100 to 100. A score above 20 is considered good enough, and a score above 50 is considered excellent. A high Net Promoter Score is great, but surveys are just a story. The actual introduction is the action.
In January of this year, we took a look at new assets raised in 2022. 2022 has been the toughest year ever for the financial advice industry, with both stocks and bonds crashing. So what do clients think of the work we’ve been doing? Last year, according to our own internal data gathered from the custodians we work with, we made over $515 million. of new funding. Of that total, over $63 million came from referrals (new clients referred by existing clients). Markets can rise, fall, or stay flat in any given year. we can’t control it. But what we can control is the services we provide and the assistance we provide. It’s the only thing we have power over. That’s how we want to be judged. Inbound assets from referrals have been remarkably stable for us over the last 5 years, $48M in 2018, $50M in 2019, $60M in 2020, $72M in 2021 . The market value of the portfolio will fluctuate as follows: They come in between bullish and bearish markets, which is out of our control, so we have to think in terms of: our own Be consistent and let the chips fall everywhere.
So if you ask me what I’m most passionate about as the company’s CEO, it’s referrals. This doesn’t quite capture every aspect of the myriad things we do every day, but it definitely works as a distillation of everything. So congratulations on winning a new client, Mention Just another hit with a new client win.
I spent the first half of my career at a company I couldn’t introduce. The “senior brokers” and company management made 500 dials a day as cold calls because they didn’t fly fuck if the client was happy. Sales remained unchanged. When I quit, I vowed to spend the rest of my career building opposition. This is what I’m looking at to tell you how I’m doing.
Let’s get back to talking.
third act
At the beginning of Act 3, Josh finds himself at a crossroads. He has specialized management of the company by recruiting and promoting senior level people in all departments such as compliance, trading, human resources, research and portfolio management, financial planning, operations and customer service. He even hired a president to help oversee it all.
His kids are now in their teens, and the oldest is now in college. That part is over for him. His daughter will be driving in a week. His son will enter high school this fall. Now that he has more time on his hands, what will he do? maybe not. Let’s see.
His employees and executives run their respective competitions every day with a shared mission to win more clients and turn all of them into net promoters of our practice. has created a culture of ownership and accountability by building shareholders out of a dozen employees. Everyone is pulling in the same direction and the snowball is starting to roll downhill. This is a “cumulative advantage” business, and as you know, we’ve definitely killed ourselves by “accumulating all these years.”
And now the question for Josh becomes “What’s next?” he doesn’t know But if he can do what he wants, it’s more writing, speaking, teaching, meeting people, networking, and being creative. . It’s about building more, innovating, and taking calculated risks (and yes, sometimes even the losses that come with it). It’s fighting the same battle for investors everywhere, but with bigger weapons and stronger allies.
This weekend is his 46th birthday. It’s official – he’s reached his late 40s. Many people depend on him. higher stakes. bigger stadium. Mistakes of a lifetime in Backview with lots of new mistakes yet to be made. And hopefully there’s enough time left to enjoy it all.
The joke that started out of nowhere and obscure is now growing. If he’s still laughing, let him laugh while he can. As a nine-time Grammy Award winner Sung by Brandi Carlisle “I’ve been to the movies, I’ve seen how it ends. And the joke is on them.
Summer 2006