Ron Carson on Why Advisors Should Embrace Complexity
When Ron Carson thinks about how his financial planning firm has changed over the years, he likens it to the Nebraska farm he grew up on and still owns.
Forty years ago, he worked the soybean, corn and alfalfa fields with his dad, while his mom tracked the commodities’ prices with charts plastered across the kitchen walls. Today, there are sensors and Wi-Fi connected devices. The farm has grown tenfold, to 10,000 acres, and its payroll boasts technology experts, biochemists and other PhDs.
“It’s a lot more complicated now,” Carson says. “The business is complex, the tools that competitors are using are more advanced. If you aren’t getting bigger and smarter, it can be hard to pay the bills.”
The same goes for his financial planning firm, Carson Wealth Management Group. “The business I was running 15 years ago — the one that my success was built on — wouldn’t survive a day in today’s landscape,” he says.
The industry has grown increasingly complicated, he says. Rising costs, falling margins and more demanding clients have led to a shifting environment for advisors. Like many, he built his business with a combination of charm, innumerable lunch meetings, grit and hustle in the endless chase of high net worth clients. But behind the scenes, it’s been his never-settle attitude and his willingness to reinvent himself that have made Carson a success.
Today, his firm boasts more than $8 billion in client assets under management and advisement*. Carson also is ranked among the top advisors in America by Forbes and Financial Times, among others, and is one of only two independent advisors inducted into Barron’s inaugural Hall of Fame**.
So how did he do it?
Ten years ago, Carson looked around his very successful firm and saw it wasn’t ready for the future that was coming. His firm was great at getting new clients, but he didn’t know as much about them as he wanted to. Costs of regulatory compliance were rising, and pressure was building from fees and competition from nontraditional players.
Meanwhile, he was still chasing the same clients as everyone else, with the idea that it would equate to larger margins for his business. But every day that was proving to be less true, as his competitors seemed to be catching up. And what he had to offer clients wasn’t that much different. Something had to change.
So Carson went on a spending spree: He invested in new software and people — nearly $40 million since 2010, he says. The approach was designed to get more and better data about the customers he served in order to offer more specialized and unique services to a wider client base. It also made his advisors’ jobs simpler.
The new technology allowed for automation of overhead and compliancewhile also making it possible to serve clients who were too expensive to take on before. And as technology automates processes that previously required their involvement, advisors are now able to spend more time with clients, allowing for a more intimate experience.
“Customers want more services, and they don’t want to pay as much for them, so you have to have a strategy that brings in more customers while providing them the services they want,” he says.
For the strategy to work, the firm had to scale up its workforce and its scope. And the key to that approach was hiring the right people. Carson hired more certified financial planners, more lawyers, more certified public accountants and more certified financial analysts to bolster the expertise and sophistication on his staff, which allowed the firm to take on more complex challenges.
“Good people can be costly, but they are worth it,” he says. “You have to view these costs as investments, and you can’t be afraid to make them.”
Investing in sophistication allowed the firm’s scope to widen to address the full — and often elaborate — range of client needs. It also allowed Carson to get rid of asset minimums for clients, a practice that has been a mainstay in the industry for years.
“With technology, asset minimums can be a relic of the past,” he says. “If you’re able to serve more clients and lower your fixed costs, you have more potential for growth. And you can get to know clients better than they know themselves.”
Help Clients Help Themselves
For the first 25 years of Carson’s career, his success was tied to his ability to foster relationships. If you were a good salesman, people would trust their money with you, he says. Now, the buyer has as much information as the seller.
“The relationship is important,” he says. “But today it’s the price of admission, when in the past it was a competitive advantage.”
More and more clients want advisors who can help demystify, educate and curate choices as part of the decision-making process. Carson likens the role of a modern advisor to that of a librarian: being the person who helps a client find the answers, instead of the person who tries to have all the answers. That means helping clients navigate options, fees and costs and communicating with them in a way that empowers the clients to make decisions. That also means being a guide to resources, not a person who feels like they have to know it all.
“I’m still shocked by the number of advisors who feel like they have to be the next Warren Buffett,” he says. “The modern customer wants to know what we actually do and what they are paying us for, and they want to be a part of the process. It’s our job to make that happen in a way that’s palatable.”
Once You’ve Hired the Right People, Get Out of Their Way
Some of Carson’s most cringe-worthy memories and costliest moments in the business were times he tried to micromanage his staff, manage all firm operations and make every strategic decision. That wouldn’t work on the farm, and it wasn’t helping his firm, either.
“I’ve made a lot of mistakes trying to run the organization as a dictatorship,” he says. “It took me a long time to realize that the measure of a great firm is how well it runs when you aren’t around. I try to recognize my strengths and delegate everything else.”
As such, he strictly limits the number of people who report to him and prides himself on giving his employees the freedom to innovate and make decisions.
Relinquishing control can be hard, Carson says. He suggests every advisor ask themselves, “If I were to die today, would my clients stay with the firm?” Or better yet, “Would I trust my own family’s wealth with the people and the operation I’ve left behind?”
Many wealth management firms were built on the charm and relationship-building ability of one or two charismatic advisors. While the human touch is still important, it’s not enough to sustain and grow in the modern environment. Charisma might be hiding glaring holes in the firm’s business model.
“If you are the one adding disproportionate value, then you haven’t surrounded yourself with great people,” he says. “And if you haven’t done that, then you don’t really have a business. You have a job.”
Above all, you must prepare for change instead of fearing it, he says.
“One thing I learned on the farm is you have to work hard to survive,” Carson says. “The environment for advisors who aren’t ready to roll up their sleeves and embrace change is going to be tough. But advisors who put in the work will thrive.”
*Please note that the amount of CWM, LLC’s Assets Under Advisement is considerably larger than the amount of the firms regulatory Assets Under Management. Assets Under Advisement include regulatory Assets Under Management reported in CWM, LLC’s Form ADV I, in addition to assets with respect to which CWM, LLC may provide consulting and/or financial planning services, but does not have any management, execution or trading authority. CWM, LLC’s regulatory Assets Under Management can be found in Item 5.F of CWM, LLC’s Form ADV I, available at https://www.adviserinfo.sec.gov.
**Recognition from rating services or publications is no guarantee of future investment success. Working with a highly rated advisor does not ensure that a client or prospective client will experience a higher level of performance of results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluations. Forbes ranking algorithm is based on quality of practice, including: telephone and in-person interviews, client retention, industry experience, review of compliance records, firm nominations and quantitative criteria. Barron’s rankings are based on data provided by over 4,000 of the nation’s most productive advisors. Factors included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Financial Times candidate firms were scored based on six criteria: assets under management (AUM), AUM growth rate, years in existence, advanced industry credentials, online accessibility and compliance records. Forbes ranking is based on quality of practice, telephone and in-person interviews, client retention, industry experience, review of compliance records, firm nominations and quantitative criteria.