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The Societal Duty of Businesses: Happiness, Meaning, and Fulfillment for Your People

 

Before becoming the Chief Operating Officer, my primary role at Morton Capital was as a financial advisor. In 2017, I was working with a prospective client who ran a non-profit in Northern California. We were having a discussion about her life and wealth goals and began chatting about her role as the leader of an organization. I asked her to share her favorite aspect of leading the non-profit organization and she quickly said, “The dinner table conversations.” I was immediately confused but asked her to describe what she meant. She said, “As a leader, I am responsible for making sure my team finds meaning in the mission of the organization, is fulfilled in their career and ultimately goes home to have positive dinner conversations with their families.” I was blown away by this story and it transformed my views on leadership. Most books, articles, and podcasts define leadership as being about the processes and the people. And when it comes to the people, research typically focuses on boosting productivity and engagement within the organization. But in reality, the impact of leadership goes beyond the four walls of the business. The people leaders work with go home to family and friends, and they bring whatever energy they felt during the day home with them. Sadly, according to the most recent workplace studies, 40% of people are not bringing positive energy home; they are stressed and unhappy. I believe this is why my prospective client highlighted that her most important role was to impact dinner table conversations.

It’s been four years since that meeting and upon further reflection, I asked myself, “Does the influence leaders have on their people have to end at the dinner table?” The more I have researched, the more I am convinced it does not. If people are treated well at work, they will be happier, and studies show that happier people will be less stressed and kinder towards others. This made me ask the next question, “If we had kinder people in our society, could we create real change within society at large?” There are some obvious benefits to fostering a kinder society, such as better relationships and less depression. But a lack of kindness is also a root cause of more complex societal issues, such as political divisiveness, racism, animal cruelty, and shootings. These issues are obviously multi-faceted, and I am not proposing that kindness is the singular solution; but I am proposing that it can tilt the scales.

In the same way we ask the education system to influence better behavior in children, I believe it is fair to ask that workplaces do the same for adults. In fact, the workplace is probably one of the most influential places due to the simple fact that it is where we spend most of our waking hours. If leaders saw it as their societal duty to provide their people with fulfilling, happy careers, the trickle-down effect could be meaningful.

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Leaders are the new teachers

I should note that there is not much research on how workplaces impact society, so I have been digging into other sources to support this thesis. I mentioned earlier that 40% of people are stressed, unhappy or dislike their leader. This means that almost half of the people you meet had negative experiences that week. There is also research on the impact of positive “energies” vs. negative “energies,” and what the studies found is that these energies are learned behaviors. This means that unless there is a medical reason, people are not born unkind, they learned that behavior. So, there is an opportunity to help teach people how to be kinder and happier through positive relationships. These positive relationships can actually change your physiological health for the better by lowering your blood pressure and arming individuals with a heightened ability to navigate stressful situations. We’ve actually seen proof of this in classrooms when observing teachers who approach their students with positivity instead of negativity. Think about your favorite teacher growing up. What are the key attributes of that person? I’m guessing you thought of words like empathetic, caring, thoughtful, individualized teaching, etc. Likely when an issue arose in the classroom, that teacher didn’t say,  “why are you this way?” but rather “what habits have you learned that led to this behavior and how can I help you learn a new behavior?” The research shows that children who were approached with empathy in this manner are happier, and ultimately more successful. In my opinion – as adults – workplaces are just the new classrooms and leaders are the new teachers.

Be aware of cultural disruptors that prevent happiness

Cultural Disruptor #1: “It’s them, not me”

This is the most common excuse I hear from owners of companies who are not interested in taking on the societal responsibility of helping people be happier. What’s ironic about this excuse is that the business itself will likely suffer the most from this attitude. The most frequent example of this is when leaders complain to me about the “millennials” that work for them. They “want it now,” are “entitled,” and are “lazy.” My first response to them is “know your audience”, as I am a millennial myself, and second, “what led you to the conclusion that they are the problem?” Mark Sylvester referenced this issue on his TEDx covering problem solving. He said, “everyone wants a one-click solution to solve their problem, but it’s your problem to solve and your reward to receive.” Instead of pointing at millennials as the problem, if we started asking them what they desire in a workplace to be successful, we would learn that they have several needs. They desire to have a plan, need help building confidence, and want their company to be relevant. These seem like fairly reasonable requests, especially if they are asking to grow as individuals and contribute to the company. We have to remember that millennials are the first generation that grew up being told how “special” they are, but might not actually have the confidence to make meaningful “special” contributions to the company. Many people are not lucky enough to have attentive parents, or thoughtful mentors. In the absence of those role models, leaders should assume that part of their job is to empower people to be confident in themselves.

Cultural Disruptor #2: “There isn’t enough time to help people be happy”

The difficult part about this disruptor is that time is a precious commodity and asking leaders to give more time to their people can feel like a big ask. But we have to remember that while founders start companies, they don’t usually build businesses alone. People build businesses, so shouldn’t we spend time building up people? This means teaching people the skills that they need to be successful. And when they aren’t successful, we should be asking questions to get to the heart of the issue so they can learn from their mistakes. For example, whenever there is an issue, leaders can use the following three-question system: 1) what could I have done differently? 2) what could the individual have done differently? 3) are there any processes/systems that need to change to be more successful in the future? Using these three questions will help people feel supported and not fearful that they alone are to blame when mistakes inevitably happen. Sometimes the goal of helping people be happier can actually be accomplished just by helping them feel safer.

Cultural Disruptor #3: “Blind loyalty”

Every time someone tells me one of their core values is loyalty, I am equally thrilled they have this value and become cautious because loyalty can turn into blind loyalty in an instant. This blind loyalty causes businesses and organizations to keep people in leadership positions who are posing obstacles to a firm’s progress. For example, let’s say you run a family business and Uncle Dave is in charge of the sales team. Over the past 2 years, you have experienced 25% turnover in that department, and in exit interviews, people have expressed that they didn’t feel empowered by Uncle Dave. You chatted with Dave about this a few times but have been reluctant to fire him because he is “family.” This is the same story I hear when people in leadership have “been with the company for 20 years and it’s too late to change them”, so we just keep dealing with their negative energy/leadership style. This type of blind loyalty resulting from nepotism or company tenure, is detrimental to organizations and should be dealt with or avoided at all costs because your people are watching you tolerate this behavior. This tolerance will cause trust to slowly diminish within the organization, lead to increased gossip/turmoil, and undermine the mission of promoting happiness in your people.

Cultural Disruptor #4: “Throwing money at the problem”

There is ample research showing that money is not the best tool for truly motivating people. However, it is generally the easiest solution that requires the least amount of energy and thoughtfulness. In the short term, using money to motivate people or promote happiness will probably work. However, in three months, people tend to forget about their raise/bonus and revert back to habits that do not promote the business or workplace wellness. Leaders need to use a combination of intrinsic and extrinsic motivation to develop their people. Intrinsic motivation tends to be more feelings-based – i.e., feeling that their boss cares about them, or they are proud of the mission of the company, or the culture is awesome. Extrinsic motivation is generally about compensation and benefits. Both are important, but intrinsic motivators are best for long-term happiness and growth.

How organizations can influence change

1) Be curious about trust

It will be difficult for any organization to make progress if they have not taken time to address where a lack of trust exists within an organization. Trust is tricky because there are no simple solutions. In a podcast with Esther Perel, a renowned psychotherapist and author, she discussed trust and quoted a philosopher who  said, “Trust is a risk masquerading as a promise,” which is a profound concept. We often ask people to trust us because of our history or expertise, but what we are really asking is for people to take a risk on us. This is a bigger commitment than we may realize and takes a significant amount of effort on the part of the other person. To truly create a culture of trust, I recommend reading two books simultaneously – the Five Dysfunctions of a Team and the 15 Commitments of Conscious Leadership. Start with the first few chapters of the 15 Commitments so that your mindset is open and committed to learning. Then read the Five Dysfunctions with 3-6 leaders within the organization. There are some great practical applications in the book that will help any organization understand where a lack of trust is negatively influencing the business. At Morton Capital, we decided to take a year off from growth in 2018 to focus on trust and it was the best decision we could have made. Now, conversations around trust are normalized within our company and we more quickly and openly address issues that inevitably arise.

2) Develop career pathing that increases engagement

An increase in engagement is correlated to happiness and fulfillment. One of the most important ways to foster engagement is to create clear career paths for every employee within the organization. In order for these career paths to be effective, they need to both be scalable and customized. Start by creating general career paths within the organization that outline the qualitative and quantitative skills necessary for an individual to make progress. The qualitative skills should reflect the values of the company, emphasize respect for colleagues, and highlight the importance of learning. Then, survey team members to find out how they want to contribute and add value to the organization. If they have questions about their options, dig in and have in-depth discussions about the potential career paths within the organization. When their goals are clear, meet with team members regularly to develop customized timelines to help them contribute to the organization in a way that will grow the company and create career opportunities. This is especially important in a remote workplace, where managers will have to adopt “goal-based” leadership vs. “presence-based” leadership to measure success. In addition, create an educational program to help people grow their workplace skills (such as organizational or goal-setting skills) and their technical knowledge to scale learning and development. According to workplace surveys, this level of engagement/happiness results in an average of 21% higher profitability than unengaged organizations.

3) Have a vision people will rally around

Simon Sinek recently published a book called “The Infinite Game” where he proposes that all organizations should have a ‘just cause’ that influences the behaviors and vision of the company. This helps people find meaning in their work and do something that is ‘for others’ instead of just for the sake of making money. In our organization, we have a mission of “empowering better investors through education” with the goal of helping people make better financial decisions that align with their values. By working for the benefit of others, we are able to be clear about our company goals and strategies, leading to a better client experience and a vision that inspires our people.

Leaders can inspire people to be better members of society

It’s been said that leaders need to lead by example and be the change they want to see. When I think about my own career – starting as a wedding planner, then a barista, followed by fitness instructor, an operations administrator, financial planner, advisor, and now COO/business owner – I can certainly say that I would not have made it this far without leaders who believed in me and saw the importance of workplace happiness. Our CEO, Jeff Sarti, will openly share that one of his top priorities for our company is creating an organization where people love coming to work. This statement, along with his humble confidence, empathy, and positive leadership, gives our entire team motivation to continue pushing forward the mission of the company. This energy causes a boomerang effect, inspiring our firm’s leadership to empower our team so that they are fulfilled in their careers, bring positive energy into their dinner table conversations, and are kinder members of society.

 

To see research/references mentioned in this article, click here.

To view Stacey’s TEDx conversation on “The Societal Duty of Businesses,” click here.

Disclosures:

AUM information as of 12/31/2020. Morton Capital is an SEC registered investment adviser; however, such registration does not imply any level of skill or training.  Our disclosure brochure (Form ADV Part 2A) contains detailed disclosures regarding our services and fees, along with applicable conflicts and how we address such conflicts.  A copy can be obtained upon request or at http://www.adviserinfo.sec.govwww.adviserinfo.sec.gov.

 

 

 

5 Untold Truths of Acting in Your Clients’ Best Interest

FOREWORD by Kate Holmes — Innovating Advice, FOUNDER & CEO

What does acting in your clients’ best interest mean to you? When was the last time you challenged that thinking?

Going beyond top-of-mind responses like compensation, investment portfolios, and consistent, clear communication, you’ll find that truly acting in your client’’s best interest is much broader than you think and leads to more fulfilled employees, happier clients, and a more successful, resilient business. To get there often requires a mindset shift and an abundance mentality, meaning that once you’ve committed to thinking and doing things differently, everyone wins. This won’t happen overnight but it’s an outcome worth investing in as it’ll shape the future of our industry. As important as quarterly investment reviews and annual compliance requirements are, making time to regularly and thoughtfully pause from working in the business to ensure you’re always working on the business is well worth it. Part of that process is challenging your thinking to continually innovate, which is crucial to the ongoing success of any organization. It’s also what’s in your clients’ best interest.

As financial advisors, we often hear — and even say — the phrase “we are fiduciaries.” What we are conveying when we say this is that we put our clients’ interest in front of our own — an all-too-important distinction in an industry that has spent the last 20 years trying to rebuild its reputation. However, the truth of what it actually means to act in the best interest of a client is rarely explored, and, in fact, this phrase is even sometimes used solely as a marketing tactic. If a financial advisory firm were to truly act in its clients’ best interest, it would go far beyond the investments it recommends or planning strategies its advisors propose, but also focus on the enterprise it is creating. We believe this begins by focusing on five untold truths of what it means to act in a client’s best interest.

Untold Truth #1: Create a resilient enterprise

As a service-based industry, our people are our most important assets. Most registered investment advisors are not selling products, but rather asking our clients to trust us — our people — to manage their wealth appropriately. To continue to do so, we need to ensure our company can stand the test of time and thus we need to think long term. Consensus thinking around how to run a successful business, though, is to set clear goals that can be measured over specific time frames. Metrics such as gross margins or revenue per employee are measured on a yearly or even quarterly basis, with success being defined as consistently improving on these numbers. But what if these “truths” around running a business are simply arbitrary metrics and, more importantly, this focus on short-term goals affects our ability to build a lasting, resilient enterprise that will serve our clients best over the long run? To be clear, we are not saying that these metrics are not important and that accountability to these metrics should be ignored. But putting too much emphasis on these shorter-term measuring sticks can often result in strategic decisions that conflict with truly putting a client’s best interest at the forefront. Simply put, we believe that there are untold truths of running a successful organization that should be more focused on the long term. This means we need strong infrastructure, processes that will create efficiencies and scale, and effective management of our profits and losses so that our company will not be lost to the whims of the markets. After all, you cannot take care of your clients if there is no one here to take care of them. To that end, the first step in creating a resilient enterprise is to create an infrastructure that can withstand significant challenges. We can look to the restaurant industry as an example of well-designed infrastructure (as well as an industry that has had to display a level of resiliency during a pandemic environment). Think about the key players— chef, sous chef, kitchen staff, expediter, servers, bussers, host/hostess, and manager. Each person plays a unique and specific role and, in truth, none of them could do their job without the other. After all, a server cannot serve food without a chef to prepare that food. This is similar to a well-run financial advisory firm. A resilient firm focuses attention on the activities that need to be accomplished [i.e., financial planning, investment research, portfolio management, client servicing, business operations (compliance/finance/ HR), relationship management, and business development] and team members are dedicated to their role and specialty. The resilient firm also leverages marketing to engage with their client communities and technology for effective and efficient communication. If you can create an infrastructure that is resilient to the challenges the firm might face, you have accomplished the first step in establishing a long-lived enterprise.

The second step is not only to create efficient processes but to document them as well. Every single one. Do you know how many steps it takes to onboard one new client with three investment accounts and a financial plan? Around 250 steps. It would be unfair to expect your team to execute processes if they are not documented and expectations are not clearly set. This is a daunting task and usually one of the first items to get pushed to the back of the to-do list. But business owners do not have to do everything. In fact, it would be best to collaborate with a team member regularly doing these tasks so that they can set up a process by which they and anyone who joins after them will be successful. Remember that an employee is acting on behalf of the client, so a successful employee will create the best possible client experience. If the firm has detailed processes, as well as an excellent communication plan where a client is updated regularly on progress, clients will have more confidence in the advice they are given.

And the third step to setting up a resilient enterprise is to manage profits and losses with the utmost thoughtfulness and care. This means that the management of revenue and expenses is more than a task for the person in charge of finance. In fact, the P&L statement should be treated in the same way as you would a client’s nest egg. It is just a much bigger balance sheet. The expenses (human capital/ compensation, rent/office, technology, marketing, etc.) are investments and revenue is your return on investment. As we all know, to get a return, we must invest and take on financial risk. But we should not take on too much risk (i.e., dig into our profitability safety net) because we would not want a market correction to cause us to lose our ability to effectively serve our clients and act in their best interest. If we invest thoughtfully, however, the results will be a more efficient infrastructure, scalable processes, and an excellent employee and client experience.

 

Untold Truth #2: Focus on your employee experience

It is not uncommon for any firm to obsess over its client experience, whether that includes the services it offers or the way it differentiates itself in the market. However, it is far too often overlooked that the employees are the ones actually providing this experience. The truth is, if your employees are not happy, it is a guarantee that your clients will eventually not be happy. The employee experience encompasses all of the following aspects of a business: culture, career pathing, compensation philosophy, resources, talent management, education, transparency, trust, respect, values, meaningful/ fulfilling work, and an empowering leadership team. Oftentimes, we mistake a positive culture with an organization where people get along and like working together. This definition of culture is too limited because it only focuses on the employee-to-employee dynamic and is frequently too reliant on people being physically present with one another. While there are immense benefits to people physically working together, they need to be connected beyond the four walls of the office to have an enduring positive culture. This lasting positive culture starts with the leadership team and their ability to create an environment where people feel truly cared for beyond their work output. Think about the way we as humans maintain any kind of long-distance relationship, like with family or childhood friends — it is not always possible to be physically present, but it is possible to show that you care.

Image for postIn advisory firms, this care can be displayed through the ability of leaders and managers should be empowered and trained to prioritize personnel growth and empower them to achieve success in their careers. If an organization focuses on its employee experience, the team members will bring their best selves to work each day and the employee, the firm, and the clients will all benefit.the organization to offer career growth opportunities, allow team members to build personal wealth with transparent compensation plans, and listen when team members articulate what would make them most fulfilled in their work (see the exhibit to the right).

Untold Truth #3: Prioritize education and lifelong learning

Our clients are the beneficiaries of our knowledge. This could be factual knowledge, like investment research or financial planning strategies, or intuitive knowledge, like goal setting or behavioral finance. In either case, the truth is that the only way to ensure your clients are getting the best possible advice is to reject complacency and encourage continuous personal growth. Our industry has many resources available, including financial publications, webinars, conferences, and programs and credentials like the G2 Leadership Institute or CFP® certification. However, it is not enough for firms to send their team members out for education outside of the four walls of the organization. There also has to be a purposeful program within the organization so that everyone knows that learning and education are cornerstones of the firm. This focus on education could look like accountability groups, study sessions, education sessions with COIs or other experts, employee-led case studies on investment and planning topics, or even life skills (e.g., how to keep your inbox from overwhelming you). Oftentimes, firms are reluctant to form mandatory education programs for fear that they will take away from the actual work that needs to be done or business development activities. But, if you are one of those firms, have you asked yourself the question about what happens if you do not invest in education? If not, you may not want to know the answer. If you instead ask your team members to spend 2–3 hours per week investing in themselves, the result will likely create a more fulfilled team member with better and more effective work habits. If clients are to truly get our best, we must ask our people to adopt an attitude of lifelong learning and continually strive to grow.

 

Untold Truth #4: Grow the organization

Some clients fear firm growth because they think that will mean you are less dedicated to them. This is understandable, especially if you are running a silo practice where you are “the person” to whom they go for everything. However, the truth is, if you are a founder/principal of an organization, it might actually be in their best interest for you to have another advisor take over as their dedicated relationship manager so that you can grow the business. If you grow the business, you will have more resources for better research, technology, financial planning tools, talent acquisitions, support positions, and leaders/managers. These additional resources can translate to more services that will solve client problems and give advisors more time to focus on client strategy and goals. In addition, if you are to truly create an effective enterprise, those clients will be better served by a specialist who is dedicated to investment advising and financial planning and not distracted by running a business, trading, or filling out paperwork. Appointing dedicated leaders who focus on growing (and running) the business will create more time for client-facing personnel to spend with the client. And as the firm grows, there will be more talent with whom to collaborate to solve client needs and create strategies and plans on behalf of the clients.

Growth is also important to your ability to keep talent. If you grow, more employees will be able to move forward on their career path, building knowledge that will enable them to face and conquer more challenges. In addition, you will attract those who are trying to create a future for their own families. Ideally, this growth will create multiple owners in an organization, which will establish more resiliency and strength. These talented team members will partner with you to continually expand the company and help serve more clients.

 

Untold Truth #5: Don’t just invest with the herd

It is easy to invest alongside a benchmark (e.g., the S&P 500 or Barclays Agg). However, there are thousands of businesses that make money outside of public companies or public bonds. Aren’t we doing a disservice to our clients if we do not look at every possible opportunity? Yes, it is true that it is much harder to seek out investments that add value beyond the traditional markets or to find cash-flowing assets in a world with all-time-low interest rates. However, I believe it is also true—and absolutely necessary—that you should do so (when appropriate) in order to act in your clients’ best interest. If you do not utilize alternative investments when appropriate for clients and continue sailing along with only stocks and bonds, you will eventually subject your client to more physical (and emotional) volatility than any plan can handle.

Truly diversifying your clients’ assets must include an analysis of risks and purposefully putting “risk eggs” in different baskets. This might mean investing in stocks (subject to market risk), some bonds (subject to interest rate risk), real estate (subject to market, idiosyncratic or leverage risks), and other alternatives when appropriate (subject to other risks not correlated to the markets). However, many clients only have exposure to 75% of these categories, all of which can suffer in a nasty market. The truth is that it takes hard work, dedicated resources, and a willingness to look different that pushes some advisors to look outside of the box for alternative investments and veer from the herd. We believe it is a risk to not hide behind a benchmark and use the excuse that “the market is down, which is why your portfolio is down.” However, it is a risk more advisors should take if they want to do best by their clients. If they are willing to source non-traditional investments, they can then say to their clients, “Even though the market is down, we have you allocated to a diversified pool of investments. Some of these are not subject to the risks of the stock market, which we believe will help keep your portfolio afloat and increase the likelihood of reaching your financial goals.” The second answer is not only powerful from a performance standpoint, but also from a behavioral finance perspective.

Advisors often encourage clients to align their investments with their goals. But do you know why we do that? Because defining purpose = protection. It is paramount that advisors dig deep and truly understand how the client will react in order to build a solid investment strategy (one that includes emotional behaviors). Sometimes advisors do not insert emotions into the equation, but emotions show up whether you address them or not. Genuinely understanding the purpose behind someone’s wealth and the emotions tied to their goals will increase the client’s success rate. Research shows that negative emotions (such as fear) hit us with an intensity that is two and a half times stronger than positive emotions because they signal a disturbance that we should do something. When a client defines the purpose of their wealth, it provides more clarity to the “why” behind the investment strategy and ultimately protects the client from their own emotions. If we are to truly act in the best interest of clients, we cannot only focus on the specific investments, but also need to understand emotions and help define the purpose so that clients have more confidence in the end result.

 

Concluding Thoughts

It is important that advisory firms recognize that their ability to service their clients is contingent upon the strong foundation of the business (including the resiliency of their investments) and the happiness of their team members. If we put thoughtful energy into the business, inspire and empower our employees, and care for our clients, we will then be able to truthfully say we are acting in our clients’ best interest.

 

About the Authors:

Stacey McKinnon, Morton Capital, COO

Stacey McKinnon, CFP®, is the Chief Operating Officer and a wealth advisor at Morton Capital, an RIA with over $2B in AUM and more than 45 employees. She is passionate about creating environments where employees and clients can thrive and has dedicated her professional career to spreading the message of positive leadership inside Morton Capital and throughout the financial services industry. Being from Lake Tahoe, a small town in Northern California, she takes this same passion into her personal life with the goal of creating an environment where her family can thrive. She enjoys paddle boarding, skiing, hikes with her pup and husband, and most other outdoor activities. The “pursuit of being better” is her personal mantra and is the underlying theme of her papers, podcasts and public speaking engagements. Learn more about Morton Capital here.

Kate Holmes, Innovating Advice, FOUNDER & CEO

Kate Holmes, CFP®, is the energetic and passionate founder of Innovating Advice, which provides coaching, consulting and community for forward-thinking financial advisors and financial planners. As an advocate for propelling the global financial planning profession forward, Kate has had the pleasure of speaking, consulting and working with financial services professionals in over 35 countries and territories. She is the host of the first globally focused podcast, The Innovating Advice Show, and, having worked virtually throughout her 15-year career, she can often be found traveling the world with her pilot husband or enjoying the sunshine at home in Las Vegas, Nevada. Learn more about Innovating Advice here.

 

 

Disclosures: Information presented is for educational purposes only and is not intended as an offer or solicitation with respect to the purchase of any security or asset class. This presentation should not be relied on for investment recommendations. Certain alternative investment opportunities discussed herein may only be available to eligible clients and can only be made after careful review and completion of applicable offering documents. Private investments are speculative and involve a high degree of risk. Any investment strategy involves the risk of loss of capital. Past performance is no guarantee of future results.

Schwab IMPACT 2020 Video

Our CEO, Jeff Sarti, was featured at Charles Schwab’s virtual IMPACT conference. Thousands of investment advisory professionals gathered remotely to learn how to think differently about the issues that matter most to their practices. This year Schwab highlighted four firms based on the impact they are making in the industry. In a year that has brought so much change, we are honored to be chosen.

Watch the video below as Jeff shares his personal thoughts on serving our clients during these uncertain times.

Sharkpreneur Podcast featuring Jeff Sarti ‘Growing to $2 Billion AUM’

Morton Capital CEO Jeff Sarti joined host Seth Greene on the Sharkprenuer podcast this week to talk about growing Morton Capital to $2 billion in assets under management.

Here are some of the key takeaways from this podcast:

  • Why people should view their wealth as more than just a number.
  •  How building a portfolio for the correct economic season is vital.
  • Why real estate investments allow people to be more conservative if necessary.
  • How they include real estate as assets under management at Morton Capital.
  • Why diversifying portfolios is important for people who are investing.

Thank you to Kevin and Seth for allowing us to share this segment of your podcast. We encourage listeners to head to MarketDominationLLC.com to hear more insightful episodes of Sharkprenuer episodes.


About the Podcast:
The Sharkpreneur Podcast was founded by Kevin Harrington and Seth Greene. On the podcast, Kevin and Seth interview SharkPreneurs who share straight talk on what it takes to explode your business.

About the Hosts:
Kevin Harrington is the inventor of the infomercial, one of the original sharks from the hit tv show shark tank, and has generated over 5 billion dollars in TV and digital direct response sales.

Seth Greene is the world’s #1 trusted authority on cutting edge direct response marketing, a best-selling author, the only 3x Marketer Of The Year Nominee, and the founder of http://www.MarketDominationLLC.com

Guest:
Jeff Sarti, Morton Capital, Chief Executive Officer


Disclosures

Information contained herein is provided for educational purposes only, and should not be taken as a recommendation, offer or solicitation to buy or sell any individual security or asset class. The views expressed are those of the author and are subject to change without notice.

Certain private investment opportunities may only be available to eligible clients and can only be made after careful review and completion of applicable offering documents. Private investments are speculative and involve a high degree of risk. References to specific investments and performance information contained herein are for illustrative purposes only. This is not a representation that the investments described are suitable or appropriate for any person. 

Winners of InvestmentNews’ Best Places to Work are selected based on surveys voluntarily completed by employees and employers of participating firms.  Scores from the employee survey represent three quarters of the weight of the final rankings. To be eligible for the award firms must be a registered investment adviser or broker-dealer; be in business for at least one year and have at least 15 full-time employees.  Firms do not pay a fee to participate in the survey process or rankings.

Past performance is not indicative of future results. All investments involve risk including the loss of principal. Details on MC’s advisory services, fees and investment strategies, including a summary of risks surrounding the strategies, can be found in our Form ADV Part 2A. A copy may be obtained atwww.adviserinfo.sec.gov.

Scaling An Advisory Firm By Finding New Talent Outside The Financial Services Industry, hosted by Michael Kitces featuring Stacey McKinnon

Michael Kitces sat down with our own Stacey McKinnon on his Financial Advisor Success podcast to discuss:

  • Morton’s non-traditional approach to hiring talent from outside the financial services industry to grow and scale. How Stacey has developed hiring practices to spot talent from outside the industry.
  • The in-depth interview process that Morton Capital uses to evaluate both prospective job skills and culture fit over a series of five to six meetings, and the career track that Morton has created to give everyone in the firm upward mobility to grow their careers over time.
  • The growth and evolution of Morton Capital itself as a multibillion-dollar RIA. The way the firm restructured its compensation away from traditional revenue-based approach to better align everyone on the team, the way Stacey helped the firm reduce the tendency to micromanage as the business grew by helping everyone across the firm build stronger relationships and what they dubbed a year-long culture of trust initiative, and how the Morton team now structures its weekly firm-wide education sessions every Thursday morning.

Be sure to listen to the end, where Stacey shares the challenge she faced in her own career journey when she had to decide whether to pursue an advisory or operations path, why the word “because” is so crucial in leadership conversations, and why Stacey believes the key to future success for advisors isn’t simply about finding a niche or specialization, but immersing yourself into a community of people that you can serve and with whom you have shared beliefs.

To access the show’s notes or read the transcript please click here.

About the Host:
Michael Kitces, Buckingham Wealth Partners, Head of Planning Strategy.
He is also a co-founder of the XY Planning NetworkAdvicePayfpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Guest:
Stacey McKinnon, Morton Capital, Chief Operating Officer

How Business Owners Can Find Opportunity in Chaos

While 2020 may seem like a difficult time to be a business owner, there are hidden opportunities to grow in the chaos, especially if you think of opportunity as the ability to make positive changes in your business regardless of what’s going on around you. Below are five things that every business owner should consider in this environment to capitalize on potential opportunities for growth.

Click here to read the full article.

Author:
Wade Calvert, Morton Capital, Wealth Advisor & Partner

Leadership in a New Workplace

As businesses prepare for a return to work in the coming month, one of the most important questions that every leader must be ready to address is: How do we operate differently to ensure that our people are still engaged and motivated? Beyond questions surrounding how to resume regular operations, we must first consider how we’ll successfully lead our teams through the drastic changes in their work environment.

Click here to read the full article.

Author:
Dan Charoenrath, Morton Capital, Direct of Operations

Mid Quarter Newsletter Q2 2017

Our Legacy of Stewardship

In reflecting on Lon’s rich legacy, no part of his work was more important to him than being the trusted steward of his clients’ financial futures. Stewardship is defined as the responsible management of something entrusted to one’s care. It is a position we hold in the highest regard. Beyond our charge of helping clients with financial planning and investments, our most important role is to be a trusted partner available to you and your family for any questions or needs.

Prior to Lon’s passing, he shared with clients that he was excited to unveil the updated brand and image for Morton Capital. Over the next few months we will be completing the project we started with Lon, including the below video on our stewardship philosophy. This is one of a series of five videos and outlines how we see our role as your trusted steward.

How Is Your Financial Professional Getting Paid?

Back in 1983, when Lon founded Morton Capital, the financial investment landscape largely revolved around selling products. The more products financial professionals sold you, the more commissions (read: money) they made. Charging only a single fee based on a client’s assets under management (AUM) was extremely rare, if unheard of. However, Lon saw early on that the only way to truly align himself with clients’ best interests was to be paid for his objective advice and not based upon how many products he was able to sell to them.

Today, it is much more common for advisors to be “fee-only” as opposed to charging commissions.  The challenge with the “fee-only” title, though, is that it may not tell the full story. For instance, an advisor at a brokerage firm may not directly receive commissions, but that individual may still be incentivized to make money for the firm as opposed to their clients. Brokerage firms are notorious for making fees in a myriad of ways, and in many instances, clients can’t see these fees anywhere on their statements. In a Wall Street Journal article published in 2014, it was found that individual investors trading $100,000 in municipal bonds over the course of one month paid brokers an average “spread,” or markup, of 1.73%, or $1,730. In today’s low-interest-rate environment, this could amount to an entire year’s worth of interest. Brokers could also be getting kickbacks from mutual fund companies to recommend their funds to clients. Again, these incentives don’t show up anywhere on client statements, but the concern is that those funds were selected based on the broker’s compensation rather than solely on their appropriateness for clients.

It’s essential to understand how financial professionals are paid in order to find out what factors could be guiding their decision-making. At Morton, we don’t get paid incentives for recommending any of our investments to you. Paramount to our process is getting to know you and your needs and goals first, then making recommendations based solely on what we believe is best for you. Just as Lon envisioned when he decided to create an advisory firm all those years ago, this approach puts the focus back where it belongs: on the best interests of the client.

ETFs and the Illusion of Diversification

With the recent proliferation of ETFs (exchange-traded funds, or vehicles that track indices or a basket of assets), investors are better able to get instant diversification and cost effectively purchase hundreds of stocks in one fell swoop. However, as ETFs have grown as a percentage of total stock market ownership, an unexpected result has emerged; namely, a positive feedback loop has developed as individual stocks now move up and down in lockstep fashion. This makes sense-when you buy an ETF that tracks the S&P 500, you are effectively purchasing all 500 stocks in the S&P index instantaneously, pushing all of their prices up at the same time. Similarly, when you sell that ETF, you are selling all 500 stocks simultaneously, pushing all stock prices down. No surprise that the correlation amongst stocks has moved up meaningfully in recent years. Just when you thought you “won” the diversification game by buying that ETF, you now simply own a bunch of stocks that move up and down together. This behavior will be further exacerbated in a nasty market environment (think 2008) as investors at large will sell their ETFs at a push of a keyboard button, thereby selling thousands of individual stocks in unison.

The age-old solution to diversifying beyond stocks is to add bonds to your portfolio mix. After all, bonds typically behave well during periods of stock market volatility. However, while the last 30+ years have seen falling interest rates and rising bond prices, our concern is that the next 30 years may be a mirror image, with rising rates and poor bond performance. In future stock market dislocations, we believe bonds may not act as the ballast in the portfolio that they were in the past.

Given the heightened political uncertainty in the developed world, coupled with extremely high valuations across most asset classes, we strongly believe an alternative approach toward diversification is essential. Morton Capital is a thought leader in this realm, having taken a unique approach toward diversification for decades. Fundamentally, most traditional asset classes are exposed to three main factors: 1) valuations (we live in a world of expensive valuations); 2) GDP growth (growth around the world is stagnant); and 3) interest rates (trading at all-time historical lows). It may sound counterintuitive, but we seek (rather than avoid) risk exposure to other areas of the economy to curate a well-diversified portfolio. In other words, we crave exposure to asset classes that will behave differently than stocks and bonds in a variety of market environments. Examples include exposure to reinsurance (natural disasters), alternative lending, and gold. Additional examples, where applicable for clients who can access illiquid vehicles, are private lending, real estate, and royalty streams. While investors at large are extremely complacent, as evidenced by very low volatility levels in the global markets, complacency is one risk that we aggressively seek to avoid as we are never satisfied in our search for truly alternative sources of return.

Information contained herein is for educational purposes only and does not constitute an offer to sell or solicitation to buy any security. Some alternative investment opportunities discussed may only be available to eligible clients and involve a high degree of risk. Additionally, the fees and expenses charged on these investments may be higher than those of other investments. Any investment strategy involves the risk of loss of capital. Past performance does not guarantee future results.