Reinventing Independence: Where Advisors Own the Outcome with Jim Gold

Where did you start your career, what's your path to Steward Partners, and how did you find a way to harness all the energy you have and give it away to others?

[00:00:28] Jim Gold: You know, it's amazing to say, I will be 30 years in the business on July 11th this summer, so 7/11 1995 I started at Smith Barney as a trainee out in Jericho Long Island and came up through the training program there and they had a fantastic training program.

Ultimately, I went into branch management in 1999 and spent a lot of my time in training. So I started out as a training officer myself, which was kind of fun to go back to the place I was trained. And now three and a half years later, I'm standing in front of the room teaching the new folks. Went on to have numerous roles in field management.

And I think that was one of the many things Smith Barney did right, which was that the branch system was led by people who had done the job. So an advisor walked in and said, Hey buddy, come on, can you help me out here? I got this big client, they got the IRA fee, and I'm like, just give me, I'll sign the form. You don't need to sell me on why you need me to waive that fee. So it really changed how the culture ran and how the advisors felt supported.

Then ultimately was part of the Morgan Stanley takeover. And look, it was a time in the industry where the larger firms, I think, turned the hourglass upside down.

So the hourglass used to be the client was number one, the advisor was number two because they served the client, and the firm was the least important in that relationship. Everything became about the shareholder, the firm, the firm, the firm, and the culture just changed. And we saw the opportunity between the flight to independence and this sort of cultural meltdown to say you could build a firm that gives people the tools and resource they wanted and the culture they used to have.

[00:02:03] Doug Heikkinen: So you've experienced exponential growth since founding this in 2013. What are some of the key inflection points or decisions that enabled such a rapid expansion in a relatively short period of time?

[00:02:15] Jim Gold: Yeah. It's a ferocious need to do more, in a good way. So, listen, the whole thing is very much like being a trainee. It's very Darwinian. Your first thought is how do we survive and how do I get to critical mass? How do we get enough here that we're going to get the plane to take off before we run out of runway here?

Which was probably the first three years, looking back on it. So you get to critical mass. There were numerous really important checkpoints. I mean, I remember feeling like King Kong at the top of the Empire State Building. We had a billion in assets. Now we bring in a billion every two months.

So, amazing to see that. But I think back to 2016, launching our own RIA, we're now the 18th RIA, ranked by Barron's, in the world. We picked up a broker dealer a few years later. So really putting in these formative pieces that allow the Steward of today to exist. Without those formative structural changes, we would look different than we do today.

[00:03:10] Doug Heikkinen: So you offer a W2 affiliation model for advisors and have moved to a multi custodian platform. How do these unique model offerings differentiate Steward from other firms in the independent wealth management space?

[00:03:21] Jim Gold: I don't know of another firm that has four custodial options, and I think what it allows us to do is to be truly agnostic.

So we don't have any preference of where you go. We really say, Hey, these custodians are RIA only. These custodians are different. What's important to you? What are the things you like about how your business runs today? I think if we look at the M&A opportunity in the industry, the more custodians you have, the least disruptive you can be to a person who's thinking about monetizing their practice, which is critically important, right? They don't want to have to put their clients through a move just so they can sell and monetize. And listen for us, it just accelerates our growth even further.

[00:04:01] Doug Heikkinen: So you have a huge ambitious goal of $ 1 billion in revenue and a $100 billion in assets. So what strategies are you deploying to achieve this, and how do you maintain the momentum to keep moving forward?

[00:04:13] Jim Gold: Yeah, so it's amazing to say that, usually a company, as the company matures, you see the growth decelerate, right?

Because it's hard to keep matching that. We actually had a record '23, a record '24. We're already 50% above last year in inorganic growth through recruiting and M&A. And we're really starting to focus more and more on organic growth, right? We have top producers that are growing dramatically and they have a relentless thirst for more resources and tools that we want to help them with.

And what I say to people, they say, well, Jim, why didn't you guys focus on this earlier? And I say, you have to understand when you're doing $40 million in revenue, if we could get everyone to grow by 5%, that's $2 million in revenue. Or we can go recruit $30 million in revenue and grow the firm faster. So at that time, inorganic growth was the number one growth path for us.

It's now evolved into W2 recruiting M&A, which is a really important topic. And then now organic growth by supporting our advisors with great tools and technology.

[00:05:18] Doug Heikkinen: So your equity ownership structure is often cited as the cornerstone of your culture. Can you explain how this model works and why it's so integral to your success?

[00:05:27] Jim Gold: It is integral. I would tell you, it's funny, and our folks here would tell you the same thing, is that in a opening conversation with someone, it's actually an impediment because everyone here, they remember the horror stories. And I came out of X firm and my shares went from X to X minus a hundred percent or whatever the number was.

And it's really an educational process. And then once they're here, they go, wow, I should have taken more equity in my deal. I really didn't appreciate the value of the equity. So what we wanted to do from the very beginning was say, we want a true partnership. Right? So as the co-founder and CEO of the firm, I have zero financial benefit over anyone else at this firm. So whatever your role is, you and I have the same financial opportunity here. So it is truly an equity partnership. We saw the day, which we've now hit, which is our advisors and their teams own half this company. So they are the largest single shareholder block at the company, and that's the way it should be.

They are the revenue source of this company. So it really is about saying, let's all do well together. We're all going to make money together. We're all going to build wealth together, but it has to be shared, right? This is not an us and them. This is not Animal Farm. We are all truly partners here.

[00:06:39] Doug Heikkinen: So Steward Partners has attracted significant outside investments from Cynosure and the Pritzker organization.

How has this capital infusion influenced your growth strategy and ability to pursue some more M&A opportunities?

[00:06:53] Jim Gold: You know, what it does is, I think it's a couple of things. One is our competitors like to sell against our equity and they say, you know, the equity has no value and it's worthless and don't listen to these guys.

So, one is, I think it's critical to validate that value. So when someone comes in and says, here's some money at this valuation of the firm, in both those cases, Doug, we should let people know that we not only took in capital, we took half that capital and let our partners tender shares literally down to the penny at what the firm received.

So it's great to have equity in a privately held company. It's great when it goes up in value, but Nirvana is, if you want to, you can take some chips off the table. We have advisors in both those cases that didn't, 40% of our folks did not sell any shares. So Cynosure came in in 2019, and just to give you a sense of our growth, it was six years ago next week. We were sub $9 billion in assets.

Right. We're now about $41. We were the largest deal they had ever done. We were the only firm of a type like ours they ever invested in. And then two years later, the Pritzker Organization came in, which is Tom Pritzker's family office. Tom is the chairman, Hyatt Hotels, and they had looked, they had spoken to 104 companies before us and invested in zero.

So we were the first firm they invested in. It was a hundred million dollars, and they came in at multiples of signage for his valuation in just two years. So what they brought to us is a whole new world of experience and knowledge and wisdom. They have extensive backgrounds. Keith Taylor used to run the FIG group at Carlyle.

And even today we're talking to them at the conference about one of their other investments that we're working with them on some services we can provide our advisors here. So it opens up the door of next level resources, next level capital and wisdom.

[00:08:40] Doug Heikkinen: You're known for a leadership style described as fun, fair, but firm, and maybe sometimes flexible.

How do you foster a culture that balances accountability, collaboration and innovation across such a fast growing organization?

[00:08:55] Jim Gold: You know, it's funny, we had our shareholder meeting yesterday, and at the end of it I was talking about a topic and someone shouted out from the crowd. They said, Jimmy, we trust you, pal.

And you know that, that to me is something. You can lose trust overnight, right? So we really look at every single decision we make and say, is this reflective of who we are? And make sure who we're supposed to be. So advisors are reasonable people, right? They want help, they want assistance, they want to do more, and they have no problem with the answer "no" if it doesn't make sense. But no one ever gives them the respect to explain why the answer has to be no sometimes. And more importantly to say, Hey Doug, you can't have a Skywriter fly over your office, say, "invest with Doug. You'll never lose money," but we can build you a custom website, you can do a podcast.

So there it's really helping them understand, we can get you to where you're telling me you want to get to, but here's how we have to do that together. So the fair and flexible is really saying, look, if there's a reasonable request, we're going to do what you need us to do. But listen, like my father used to say, common sense is not that common.

We try to run this, the firm with a common sense approach, which I think people find refreshing in wealth management.

[00:10:04] Doug Heikkinen: That's great. We hang onto those things from our fathers. With the industry facing a crisis in succession and the aging of advisors, how is Steward preparing for the next generation of talent and leadership within the firm?

[00:10:16] Jim Gold: Yeah, no, that's another great topic. So if you look at the stats in the industry, about two thirds of all assets are held by advisors over 55. There are fewer advisors under 40 than over 70 in the industry, right? And they look at the number that that's 65% of the assets. Projected that 50% of those advisors will be retired in 10 years.

75% in 15 years, right? That's a blink of an eye. I mean, Steward's now a 12-year-old company. So almost in the time that Stewards existed, 75% of the advisors are going to retire. So you have to have a next gen solution. And we built this M&A chassis. We acquired a company called Freedom Street and more importantly, acquired a leadership team of Freedom Street.

Their average advisor is under 45 years old. Our average advisor at Steward is under 52, so we're younger than the industry, but there's a whole cadre of opportunity where you say, listen, at Steward, you can come in here and say, Hey, you know, I'm 65 years old. Shame on me. I haven't planned for succession.

I wanna move to Steward. And it's a great home for my clients. I need your help in figuring out my legacy, which is why we call it the Legacy Channel. And maybe they're here for two years, right? And there's a nice slow, warm handoff there. The other ones we're seeing is we sort of call it sell and exit and sell and stay.

So sell and stay. We have a very significant team here for their first conference. They joined us six months ago. You have three advisors over 60 and three advisors under 40. What they lacked is the capital and resources to have that cohesive transition of the economics. The senior partners wanna retire in about five years.

They already have their second generation behind them. By the time the senior folks retire, we'll have another generation behind the current G2. But then I think it's also being thoughtful around the G1, these are the hunters, right? G2 is probably the farmers. They have a different need, they have a different skill set.

They have different resources they should have in front of them. And that's where things like having model portfolios and things they can access is they say, Hey, I don't wanna run money. I don't wanna read research reports. I wanna take care of my clients. I wanna do a great job for them.

I want to analyze their financial plan. So it's just really having a toolkit that can address that disparate need that they have.

[00:12:29] Doug Heikkinen: In an industry where many firms put themselves first, you said that at Steward, the client comes first, the advisor second, and the firm last. How does this philosophy manifest in day-to-day operations and decision making?

[00:12:41] Jim Gold: I think it comes back to, what is the client experience going to be? What are our clients looking for, and that really comes from our advisors, right? And they drive that process. We have over 14 committees at the firm founded by our advisors. So there's a, a growth committee, there's a marketing committee, there's a technology committee, there's a platform committee, and they help us get better and they help the firm get better by really saying, lots of my clients are asking for this, and lots of my clients are asking for that.

And then in that room, it will ultimately turn to, Hey, we should check out these two or three tools that are out there. We heard these could actually address that need for our clients.

[00:13:18] Doug Heikkinen: Alright, last one for you. And looking ahead, what do you see as the biggest challenges and opportunities for Steward Partners and for the independent advisory space more broadly in the next five years?

[00:13:30] Jim Gold: I think our, biggest focus is culture, right? And when you grow and grow. There's a natural concern over how do you keep a great culture, right? And in this event that we're at is really part of that. I was talking to someone yesterday, one of our asset management sponsors, they said, I've never seen a CEO get hugged so much in my life.

And so, you know, it was funny, we had our Steward session yesterday and the topic came up about culture. And I think the interesting bifurcation there, it wasn't, Hey, we need to fix our culture. It was we all love this culture. How do we protect it? And I said, the fact that we're talking about it is why I know it won't change.

So I think that's a real focus of our board of directors as well, is every meeting. And our board, by the way, sits in on many of the committees I mentioned, the advisor council, administrative council. There's a board of director representative who sits in the board with us in those councils.

So they're hearing directly from the field. So culture is critical to us and who we are, and we can never lose that. We are super excited about our growth. I said we're going to have a record year. We have over $50 million in commitments and $6 billion in assets coming in the next hundred days.

So we don't actually look at the billion revenue as a lofty goal anymore. We're looking into 2 billion and maybe two and a half. Is on the horizon somewhere.

[00:14:49] Doug Heikkinen: You've really built something fantastic here. Thank you so much for joining us.

[00:14:52] Jim Gold: My pleasure. Thanks again for being here.

[00:14:54] Doug Heikkinen: To learn more about Steward Partners, please visit stewardpartners.com.

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