Tony Sirianni: Hi, everybody, and welcome to today's panel discussion, it’s Lessons from experience with RIAs. I have two executives that I’m thrilled are joining me today ... Kurt Miscinski, he’s a CPA and he’s also the CEO of Cerity Partners, and he’s on the Capital Group Advisory Board. And then we have Eric Grey, who’s director of RIA Distribution for Capital Group, and he’s also director of the Capital Group RIA Advisory Board.

Welcome, gentlemen. I’m not coming to you from Rahway state penitentiary, this is not the Johnny Cash at Folsom Prison or anything. This is actually my background because I’m renovating a house. But I’m thrilled to have you guys here today and we can talk a little bit about RIAs with our audience. I mean, the best thing about RIAs is that you’re independent and that you’re on your own and you don’t have anybody to answer to. But the thing is that you're on your own and you don't have anybody to bounce anything off of. And this program you have, this RIA Insider^TM, I would have killed for, you know, when I started just to be able to sort of have some back and forth, get some practice management help, get some good advice. And that's one of the things you really miss when you're independent. I mean, if you're in a wirehouse, you can walk down the hall. Technically, your branch manager ought to be helping you sometimes, but at least you can get some input back and forth.

So, I think it's great to have the two of you here. Eric with your, sort of, you know, macro 60,000-foot input, because you're talking to dozens of RIAs every week. That's great.

And then of course, you know, from a perspective of success. And, you know, what you're doing out there Kurt is fantastic — to grow to $30 billion in that time. So, I want to go through that. I want to make this interesting for the folks out there and make sure that we hear about some of your success and how you did it.

We're also in the middle of an unprecedented crisis and we'll address, you know, some of how you guys are facing that and then maybe talk a little bit about the future. So, let's start with you, Kurt. Let's go the Wayback Machine here.

Twelve years ago, you got zero in assets — you know, you're starting this thing up. You got great hair. If I had your hair, I'd be President of the United States. So, let's start there. But you're going back 12 years, zero in assets.

If you were to, sort of, you know, look back and say, what are the pieces that you think made you successful from the start. Was it the people? Was it the process? Was it the platform? The partnerships?

What do you think it was, if you were looking at 12 years ago, talking to somebody who wants to start an RIA today.

Kurt Miscinski: Yeah, Tony. Thank you. Appreciate all the kind remarks. First, I would say it starts with timing.

And I wish I could tell you it was out of brilliance, planning the timing of it, but it was just very fortuitous. We launched our firm officially in 2009 at the absolute bottom of the last major recession and, therefore, we had good conditions and nothing but a very strong tailwind since we launched. But it was also at a time that might have been a bit of an inflection point for our industry first … for the first time in my career we saw the major global investment banks, a place where I spent 11 years, take a fairly hard reputational knock — that they were perceived to be bad actors in the last major financial and economic recession.

And so, for the first time you had a good portion of the wealth management industry somewhat distrusted by the marketplace, by private clients and so that gave a very nice tailwind coming off a recession.

That you had this move to independence, and for the first time in my career I also saw clients and prospective clients mention the word fiduciary. At the start of my career no one even knew how to spell fiduciary, yet alone mention are you a fiduciary, and it became increasingly important, and you combine that with the ever-growing trend that holistic wealth management was much more powerful simply than just investment management gave all the right ingredients to start the firm. So I'd say the timing of all that very much put us in a good position to grow very strongly organically.

And it was the business model. Many of us at the firm had grown up in very large private partnerships and culturally those private partnerships, where it's employee owned and you're building something together — that the organization has many faces. It's not a faceless organization.

And to create that private partnership based on meritocracy, of how you share in the success of the firm, both cash flow and in the equity, creates the right cultural environment and the right ethos. And so, the combination of that business model of being a full-service wealth management firm in the mold of a private partnership, gave us good ingredients. We've often focused on three primary things — do our colleagues take pride in what they do and where they do it within the firm.

Pride often comes with those around you when you see your colleagues who are very well educated and credentialed and experienced and are exceptional at what they do, you have more pride in what you do and where you do it.

You know, secondly to that, it's having control of your own professional fulfillment and economic destiny.

Within our firm, there's no upside limit. If you continue to contribute to the success of the firm as defined by developing more clients and those clients generate more revenue and profit for the firm, your economic success continues to climb correspondingly.

And lastly, which is probably the hardest to manage, an environment where people generally like the people they work with and trust the people they work for. And so, if we get those three things right, it's a very good business and a business model that will put you in a good position.

And then lastly, which was very much evolutionary for me personally, and maybe even some of my colleagues: leveraging everything the market has to give to you, leveraging world-class partners such as the Capital Group, to be able to extract all of its intelligence and research for the benefit of serving our clients. While I grew up in a global investment bank, we were oftentimes a bit myopic. It's what we were capable of doing. We would never say to a prospective client, before you make your decision, let me inform you of what my competitors are able to do. It was always this is what we can do and why it should be good for you.

So to have the freedom to use any and everything available in the marketplace for your clients’ benefit and harness all this world-class intelligence and to be able to synthesize it to serve clients created nothing but strong momentum coming out of the gate.

Tony Sirianni: Interesting, because you know I call that time, that's when I started Washington Wealth. It was the perfect storm. I mean, there was just — there was so much going on.

And then, but it's interesting how now 10 years later, it's that ethos that started then is really changing our industry, you know, I think for the better.

And as people are starting. One of the things you mentioned, I think is important is partnership and ownership.

You know, because that's a choice that RIAs have. If I'm going to start my RIA, am I going to share the profitability? Am I going to bring people in as partners, and it sounds to me like that choice was the right one for you?

Kurt Miscinski: I appreciate that. Yes, approximately one-third of all our colleagues have ownership in the firm.

Tony Sirianni: Fantastic. So, Eric, when you look at that, when you’re hearing that sort of origin story, how often do you see this every week? Are people bringing you the same ideas, again, maybe the thought of, how do I structure this thing, you know, how should we put it together in the first place and make it successful? You know, what partners should be leveraged, you heard that that was really important. So, what are you seeing every week when you hear Kurt talk like that?

Eric Grey: Yeah, it's interesting, you know, in our business. And we've all heard it, right: If you've seen one RIA, you’ve seen one RIA.

And I think to a degree, that's true. We all like to think that we're unique entities. But I think at the same time, there are definitely some throughputs, some tentpoles of how you build a large successful business through time and I think you're hearing them come through from Kurt.

I liked that he started with this idea of an enterprise mindset. So having a vision for the business, thinking about that business as a business, approaching it with the idea, not just in the leadership team, but throughout the organization, that you're building a standalone, self-sustaining entity that extends beyond the advisor-client relationship that all associates are engaged, and I thought it was interesting too, that he also made the pivot to culture.

And I think culture is absolutely critical that everyone shares that vision. You talked about engaging folks and ownership, sharing that vision, not just from a future state perspective, but actually in the success of the business. I would add a culture of associate empowerment. So, do they know that you're about growth, you're about innovation, that they should be disrupting themselves, that you are going to engage them above their pay grade. You are going to pull them broadly across the business. It's so compelling for people to be engaged in a business like that.

And to feel that they can raise their voice and make an impact beyond your own narrow role. And when you do that, I feel like as a leader through time, that the innovation starts to come from below, and they begin to push you. And, you know, just a couple of really simple ways I'm seeing some firms starting to make that shift. One is, starting to deliberately make a decision to move to professional management and separate those activities from day-to-day client responsibilities. Make it important, set a vision, empower someone or someones to manage and guide that. And the last is to think about what you deliver to clients.

This has been an unprecedented time for us. We already knew that technology is going to change how we were doing business. That's just accelerated.

In the last bunch of months, we know that what can be mechanized will be commoditized. So, if that list of what technology is going to commoditize just continues to grow, what is of highest value? What is your focus for your ideal client, what they're going to see as of most value, and how are you going to deliver it?

Tony Sirianni: You know, very interesting. One of the things you hit on was this idea of a notion of acceleration, right? Typically, Kurt, we get with a new technology, we don't go backwards from it, you know what I mean? So, we had this … we’re in this time now where all this work that you put in, your 12 years, your $30 billion. You're a mature company.

But now you're facing something that's unprecedented. You know what I mean, all of a sudden, had you told your board of directors. You know what, I’m going to send everybody home for like six months. Let's test our technology. Let's see how that works, and then not only that but you have this acceleration in technology, but also going back to what Eric was saying in how maybe we manage our business, you know, there have been a lot of changes. So, walk me through a little bit, you know, as you're at the helm of the ship, pandemic hits, what do you do, what are you telling your advisors and your clients?

Kurt Miscinski: Sure. Well, I feel incredibly blessed when looking back in hindsight, had you asked me in December of last year, or hey, if we were to hit a global pandemic, what would happen. I first would have asked, “What's a global pandemic?” because I never heard or saw one in my life. But now, having seen that would not have expected that the transition over would have been as easy as it was. And that's I think the good fortunes and I don't believe as a firm we’re alone of having incredible great mobile technologies — things as basic as Microsoft Teams and Zoom and Webex, of course, became the prevailing technology of choice.

But more importantly, what it did, it was a terrific — not that people getting sick or dying should be a terrific reminder of anything — but the environment that we're in was a terrific reminder of how to raise the bar for engagement. Engagement within the firm and engagement with our clients and it forced us, you know, probably for the first time in our 12-year existence to do things we never even envisioned doing. I would say, as a firm, we probably advanced cultural integration more in the last seven months than we did the prior three years. We have this incredible grassroots effort within our firm of colleagues wanting to engage with each other.

Colleagues in New York who never even saw the faces of colleagues in Southern California now are on many different internal Zoom calls and other video conferencing, so it accelerated technology use that was there, but really forced you to have to use it and what it did it just took off … that engagement. And then play that forward with clients who never would even whisper the words video conferencing anything, now are sitting on their couches with a glass of wine as we're advising them and we're popping up on shared screen various materials and you could just see the sense of ease and almost entertainment they have of how neat is this, we used to possibly drive down, find parking, come up to the office, talk about it. And now, look how comfortable we are engaging. So, without question, having the right message at the right time and the right medium is very powerful.

But this has opened the door to now new mediums of how to interact, and we've been blessed this year. We've developed over 600 new private clients already year-to-date organically. Over 50% of them we've never yet met. Two Zoom calls and a DocuSign email later, and we're onboarding a private client. Again, never would have thought that would be even possible as recently as last December, but now you're forced to operate in this way. And so, I believe some of these things will be here to stay. I don't think they'll completely replace human interaction and getting together.

But I definitely think it's going to augment how we've operated and work with clients and we as a firm don’t want to forget this time of just how well engagement has been within the firm and with our clients.

Tony Sirianni: So, you hit on a whole bunch of stuff there. One of the things that, you know, I actually wrote this article that was what a three-year-old is going to teach us about our business. And the whole point was, you know, you have the older generations here that are a little bit ambivalent about technology, you know, they're not taking Instagram photos of their food, right, sending it to anybody, but they use it when it works for them.

All of a sudden, if they want to see their grandkids, they better learn how to do Zoom. So they do.

Now the expectation is on you, you better Zoom them all the time and I love what you said about the glass of wine, because that's so true. Because now we're in a spot where the third wall is broken. It's like, you know, when you're going to see a movie and Eddie Murphy talks to the camera like this — that's where we're at now in our business, you know, we broke down the third wall that they see you in your pajamas and you see them with T-shirts, and that's cool.

And that wasn't cool a couple of years ago, you know, that has implications for real estate. I'm sure when you open your offices, you wanted them to be impressive and all that. Meanwhile everybody's in their slippy jammies talking to, you know, what's the point?

Eric, are you seeing that sort of, across the board? The same changes that Kurt was talking about?

Eric Grey: I think Kurt captured it really well. And I guess the thing that we try to remind ourselves is, it's interesting, now, six months in, we feel like old vets, right?

We know an awful lot now — it's kind of the historian’s fallacy. We know an awful lot now that we didn't know at the time at all.

And you think about those early days, it was immediately just, can we double down on our associates? Can we double down on our clients? Can we think about what they need and what engagement is going to need to look like, and can we shorten the time frame that we're thinking about innovation. Because, you know, if we're going to avoid the Stockdale Paradox, right … this is going to be over by Easter… it's going to be over by Memorial Day … it's going to be over by … and now we're looking at a period where it's likely we’ll be in this hybrid format, at least through the end of next year.

Can we think about accelerating that innovation, can we create the forums with teams coming together … empower them to say, look, you know, we should be thinking about this in 30-day blocks. What we know today is going to be completely different than what we know in 30 days … the needs of our clients, our ability to deliver is going to be different in 30 days. We need everyone to be contributing, and it's really humbling. It was humbling to see how they grabbed that, and you could see a lot of things. And I think it's coming through from Kurt, from those have been around for a long time, had a fixed view of the world, you know, can people work from home? Turns out they can, really productively.

Can you maintain culture? Turns out they can really productively. But you've got to help them with both. And at the same time we saw real innovation from those that are lesser tenured in the business in terms of how they use the technology, how they pushed us to adapt it quickly and put it into play. So, you know as Kurt said, I think, you know, we don't know. We know what pre-COVID looks like. We know what COVID looks like. We're not quite sure what that balance looks like coming out the other end. But I think the blessing in this is we got another 13 months or so as we go through this slow opening period …

For us to really pay attention and learn and take the best of what we got over the last six months and turn it into a change model going forward. And the best firms, those that do that — go from just learning to institutionalizing how they deliver, I think, come out of this in great shape.

Tony Sirianni: You know, I actually think this is when I was in the beginning, talking about your program here, this RIA Insider — this is a time that can be really valuable. Just to get RIAs together and talk and get information and listen to, you know, you've heard from … because a lot of the times if you have a smaller RIA you're dealing with clients, maybe you're hiring — you have a lot on your plate. You don't have the time that you might have to say, let me take a step back and do some strategic thinking here and this is what's going to happen.

So that's why I think this is an important conversation for advisors to hear.

One thing that you hit on, Kurt, that I want to go back to, and I think it's a challenge for every firm today, is you mentioned engagement. It sounds like it's going well. But how do you inculcate culture in a time of Zoom. You know, I have two daughters that are in their 20s, I worry about them. They haven't been back to their office in a year and a half. They don't really know anybody. They don't really have a mentor. They don't have somebody to help them. You know, it's so hard and you know we want to bring new people in the business, all the stuff we need to do.

And you talked about the engagement. Certainly, in some ways, it's better, closer, more, but how do you keep that culture going in a firm during a time like this?

Kurt Miscinski: Yeah, well. Thanks, Tony. First, I am hopeful that it will be relatively short lived in the grand scheme of things, but yet still a good exercise to go through. Our efforts on engagement have been increased interaction, increased activities —bringing people together to work on solving various aspects of our firm. So the engagement of being able to work on more things outside of providing advice to clients and servicing clients has been that tool. And I don't believe that is an absolute replacement for culture engagement. I think about how I grew up in the business starting my, you know, career with one of the largest accounting firms in the world and you're on a floor with 200 professionals, all within two years of you.

It's osmosis, you learn a lot, you see a lot by being there and being around, you know, to Eric's point about being productive in this environment, people are being productive.

And I find it almost humorous that prior to this environment within our firm, and I suspect many firms, you have an ever-growing young professional staff clamoring for more mobility and time.

And now clamoring when can we get back into the office? So there's an element of you always wish for what you don't always have, but we're definitely saying that there is a strong interest to want to resume to coming back physically together.

But that said, I suspect this experience that we've had with the global pandemic is going to lead to an increased amount of mobility, as now people have a taste of what that really is and they like elements of it. So, we will definitely have our work cut out for us. And how do you maintain, build and grow a strong culture, knowing you're likely going to increasingly become a mobile workforce? Not as potentially as mobile as we are right now here in November of 2020, but definitely much more mobile than we were coming into this year.

Tony Sirianni: Eric, you're hearing the same things from the advisors that you talk to? Any concern about how do I keep this going?

Eric Grey: Yeah, I would just support at everyone's varying scale and maturity of the business everything that Kurt has said.

I think the things we need to keep our eye on are, you know, we know over this period we've been able to sustain culture, but we've had to be deliberate about it.

And I think that's going to change, and if it extends for a period of time, we're going to have to be very deliberate about how we can continue to evolve, how we sustain culture.

There are also some things that I think will become challenging through time, and just one to think about this idea of idea-sharing within your business, the happy accidents of running into other associates talking about their products, the engagements that happen outside the formal engagement — how do we replace that in the office? And then I think it's the same for our RIAs in terms of growing business, they're going to need to maintain that culture connection to existing clients, but those happy accidents of referrals or social and business created opportunity … the longer this goes, the more will be challenged in those aspects. And I think those are things that as we come into the end of the year, thinking about this extending into next year, we're thinking a lot about.

Tony Sirianni: So we talked a little bit about how these, you know, how things might change. When you look … when you look forward, you know, we talked about technology has a tendency to accelerate, right? So which pieces from the pandemic and the new normal, dealing with clients or markets or whatever … what do you think we're going to take forward with us that are definite things we're going to keep — the Zoom — and what are the things we might leave behind?

I also think a lot about real estate and what's going to be the value of it. It's a big part of your P&L, I imagine, Kurt, too, you know. So what lessons are you going to take, you know, from this and what are you going to apply going forward?

Kurt Miscinski: Yeah. So, on the real-estate front we’re sitting on well over 100,000 square feet of space across the country.

As our leases come up, it will force us to think about, now, the footprints we have. We happen to be in among the most expensive markets in the country in New York and Chicago and San Francisco and Los Angeles and other places where rents are pretty high. Maybe they now soften a bit, but it is now causing us to talk about, do we create a lighter real-estate footprint? Do we have a concept of hoteling where colleagues can grab, in essence, their locker of stuff and bring it to the available spot, still of course having appropriate space, you know, for client meetings, for those clients who wish to come in, or prospective clients.

So that is likely to be tested. And our next couple of leases that come up are likely to test that concept and to see if we have great engagement with colleagues thinking that's the way to go.

As terms of what things are going to stick around. I'm expecting the first meetings that often almost always took place in person, that more of those will likely be done through a video conference call, or a video nature of some sort. Like this Zoom where people say, hey, let's see if there's something here to get together.

And so, I think that is here to stay. I also think this technology will become pervasive throughout our internal office equipment — that literally every workstation, every office, every phone is going to be now wired with cameras, where it wasn't that way as recently as eight, nine months ago, even though we had Zoom in our firm for nearly two years. It’s just people weren't using that. Now everyone has the HD camera, you know, posted at home, posted in the office and everywhere else. So, I think those are the things that will stay with us here on out.

Tony Sirianni: You know, it's interesting you mentioned that client with the glass of wine — that there's a level of acceptance to this Zoom stuff that you know if they don't have to go down to the office, they don't want to. You know, Eric. I'm hearing a lot from people about doing sort of a concept where you have maybe one nice meeting room for clients, you know, and then the advisors, you know, they come in and out of the offices, they need to meet with people and they just do, you know, they just need a sales desk for them to sit at, you know, and that way they're saving an awful lot on real-estate costs. Are you seeing advisors sort of looking to the future when you talk to them and trying to figure out, you know, what's going to be next with their practice?

Eric Grey: We're having a lot of those conversations. And I think, as Kurt pointed out, there's a number of things.

You know, for a global firm we would have talked about global reach in the past. Now we're going to talk about global adaptability. How do you make sure you have dispersed redundancies across the world, so if this happens again we can more flexibly move? We talk about engagement. But now I think we're also thinking about workforce resilience and that's a little bit of what you're talking about, right? You make sure, potentially, you add more flexibility, hot bunking in and out of offices. When you're in-person with clients, and when you're not, such that you're creating some flexibility and some redundancy there. I think you're going to see geographic flexibility, that probably met some resistance from leadership in the past. I think there's going to be a lot more flexibility.

And I think it's going to be seen as a perk, as an organizational benefit to being those that are most equipped and best equipped allowed you to kind of have flexibility to move about to be where you want to be while working and then, yeah, I think there's two parts of your direct question. One is this idea of balance and I think we'll come back into balance … we’ll see a balance of the in-person and the remote. We’ll see a lot more remote relative to the pre-COVID period, we’ll see us start to narrow in on when each is most effective.

But I also think there's a challenge in that and you know it's the … it's the flip side of the happy accidents concept I brought forward and that is a culture of meetings.

And so, you know, I think what starts to happen is when we can only engage remotely, what we start to use as a very fixed set of scheduling throughout the day and we're scheduling all of our folks … scheduling all of our engagements.

And at least our experience has been that, that can over swing and you need to start to pay attention to if you're using so much of the productive day simply to communicate with your associates or with your clients and not allowing them to actually do the work, it's a challenge. And I'm not sure that we as an industry have got that figured out yet. How do we maintain culture, maintain communication, but not eat up so much of the productive workday while we do it.

Tony Sirianni: That's a great … those are great points. I don't want to miss the fact that we have a CPA here and I want to talk and get Eric's point of view, too, on this.

You know, the markets and clients and you know Capital Group’s a good place to be doing this but you know, initially Kurt, what, what are you telling people about the potential for, you know, changes in taxes carried forward, capital gains, income taxes, all these things that may or may not happen. There's a lot of uncertainty. And a lot of our clients fall into … almost everybody in the capital gains, at least, they fall into those situations where they may be impacted by it. What are you seeing? And then, you know, of course you have the markets too, right? They've been volatile, to say the least. So how are you talking to people about this?

Kurt Miscinski: Yeah, great questions, Tony. I’ll break those up into two categories — planning orientation and then investment orientation.

On the planning front, without question, this has been an incredible year of all kinds of speculation coming into the election and now still with some little uncertainty still left in what might happen with a few runoffs in the Senate. This is making a lot of clients nervous, especially clients that are generating substantial annual income and might be sitting on a fair amount of unrealized gains and do you take the gains, do you not?

From a planning perspective, now, how might you think about your lifetime gift exemption, you know, and, therefore, if there's speculation it might revert back to something much lower than what it's currently at 11-plus million and 22-plus million, you know, for a married couple that starts now to factor into, all right, maybe we need to hedge a little bit, maybe we need to make some progress on some gifting here, maybe we do need to take some gains here if something might increase the tax rates going out in the future. You’ve definitely even seen it in our own industry.

You saw a surge this year of interest in independent firms wanting to find a solution, whether it was a strategic or financial partner. And much of it, not all of it, was driven by if I'm going to do something, I might as well do it this year. Relative to risk, you know, having to pay something nearly double the taxes if I wait. And so, we've been very proactive with our clients to educate them first and foremost on what are these risks. There's unfortunately no specific certainty that things will or will not happen, and with many of our clients, they're finding comfort in hedging their bets. All right, let's take a little bit of gains here. Let's maybe move some additional monies out of the taxable estate, just in case these things were to happen. But most importantly, they're comforted by the fact that we've been proactively bringing it up to them.

And so, they feel informed, even if, ultimately, they don't want to make any meaningful move, whether we recommended that was in their best interest or not, they're feeling good about that.

On the investment front, the biggest challenge this year and in recent years, is as we continue with this secular trend of historic low interest rates, this year capping that trend off of exceptionally low interest rates and other parts of the world looking at negative interest rates, people are looking for yield of, where could I get, you know, a decent return, an acceptable return without taking undue risk. And I think what we're seeing in behavior is that because there is such limited yield, people are accepting more risk in their portfolio, not, this is not what we're advocating for our clients, we're just seeing it … of looking to stretch.

Maybe this is what's fueling a much stronger market and potentially what the underlying pinnings are of the economy of people willing to take more risk for the potential of that return. And we think that is likely to be around here now for the near term, where there does not seem to be an immediate light at the end of the tunnel that, you know, short intermediate interest rates are going to get to a level where people would say, all right, 2, 3, 4, 5%, I can now start earning a decent return. So it's making sure your clients don't do the things that are typical of behavioral finance, so panic can ultimately make a series of poor decisions.

In our opinion, our client’s job is to create the wealth. Our job is to preserve and compound it. Sometimes you have to patiently wait for opportunities to present themselves, not force them and make a series of poor decisions.

Tony Sirianni: Oh, is that true. I mean, Eric. This is right down the fairway for Capital Group, I mean, this is what, you know, this is what you guys do.

A little bit, this last market … I think we've established that good firms are doing well here, you know, Kurt's firm is doing well. He's getting more clients.

We're entering this “emperor has no clothes” kind of situation where everybody's a genius in a bull market. So, for 10 years everyone's been really smart.

And now all of a sudden, things are off a little bit, so sort of the people who weren't as concerned as Kurt is about his clients, maybe not doing so well. What are you seeing and what are you guys advising?

Eric Grey: Well, you know, the first … it's kind of a relative personal detail. My 19-year-old son is home with the gap semester from college because he's unable to return. And we're seeing the news here, but he started trading options on Robinhood.

So, to your point in a bull market like this, we see some really good early indicators that maybe there are market entrants or decisions being made that aren't in the best long-term interest of those making those decisions. I think Kurt pulled it forward. Great managers, great advisors know what they do well and they're very thoughtful before they deviate from it.

They hold their principles very closely and then they subject their practices to continuous question and continuous improvement. But I think what we might be seeing, and if there's mistakes being made here, it's this tension between principles and practice.

We may be tempted to commit investment sins of omission, allowing portfolios to drift away from strategic allocations to growth because of the disparity between historically book and value companies in the marketplace … drift more to domestic companies because there's an equally wide disparity over the last bunch of years between domestic markets and international markets and, as Kurt laid out, the reach for risk in fixed income. Usually if these are thoughtful, strategic decisions, then all is well. If they're a sign of allowing short-term results to drive a change to a long-term approach, that seldom ends well. And we're seeing extremities in diversions between asset classes, between styles, between geographies, that are really at the extreme end of historic norms.

That's the focus on the mistakes. But I think there's a missed opportunity here if we don't also recognize that there are very real reasons to think about individual companies inside those out-of-favor asset classes.

You know, I'll use international as a place to go a little bit deeper. Even while international markets, as measured by indexes over the last bunch of years — with a momentary pause in 2017 — have materially lagged, what's interesting to reflect on is over the same period of the top 50 companies globally, 75% of them have been outside the U.S.

And so, taking shortcuts and kind of observing potentially what are general indicators may be masking the granular reality underneath it. And so, for a manager like Capital where we're doing individual company research, we're thinking about this. We have a global footprint. This is actually a wonderful time for clients, for us, to be thinking about taking positions in those companies and, as Kurt said, positioning ourselves to emerge in great shape on the other side.

Tony Sirianni: Now I'm also getting … we talked a lot about changes and kind of what I'm feeling and what I'm getting from this conversation is that there are some things that are immutable. We talked about, you know, good advice / bad advice.

Advice seems to be the thing that's going to stick with us. You know what I mean? That's the difference between us and a computer, although I would like to sort of follow your son. And whenever he's on options buying them, maybe we use it as a counter indicator.

You know, advice is key. And that's sort of what gives me a lot of hope, going forward about our business, you know, having the ability to give advice and a hard time just, you know, I can't get the image out of my mind, Kurt, maybe because I want a glass of wine, but the client with a glass of wine, who’s sitting there, we have that sort of connectivity. You can't get that from a computer, you know, and that seems to be the future. Would you agree, Kurt, that that's where we are?

Kurt Miscinski: Yeah, I would agree. I think that'd be a fair summary of it.

Tony Sirianni: So, we're talking about advice and how that works. You know, but before we go here, about the RIA Insider and the RIA board and how does that work, you know, Eric, and then maybe find out, you know, Kurt, what you're doing with it, how advisors can get, you know, get involved. I hope that you know people can see through just having this conversation that when you talk things out. You can pull a lot of pieces. If I'm running my own RIA, I can get a lot of good info from seeing how others are doing things.

Eric Grey: Yeah, you know, I guess, Tony, that the insight here for us is that you said it early on, right, the blessing of being independent to get to make all your own decisions. The curse of being independent is having to make all of your own decisions. Right?

And also take responsibility for everything that happens in the enterprise and how you progress it through time. And so, the insight for us was that, in danger of oversimplifying it, running a big dynamic business is complex, but you can probably bring it down to a few big functions. One is running a vibrant and efficient business.

The other is attracting and delighting the right clients through time. And the last is building an effective investment function that delivers clients their objectives on time with the right degree of risk and with superior results. So, we just took that as our guide. Our focus is on providing insights and actionable implementation, not just information, but a way to pull these services into your practice to help you do what you need to do so you can focus on what's most important — what you just identified. Which is diving in with your clients connecting with them as individuals, as people, and identifying what's most important and helping them navigate that.

I'd say there's kind of three pieces here. The first is starting with a very strong team. And over the last few years, our national team now, 70% of them are chartered financial analysts, all of them, are at least CIMA, most of them have their MBA or CFP, they have to be able to engage at an enterprise level, at a very deep level from an investment standpoint with our most sophisticated clients, and we knew that that was prerequisite.

The second was, you know, some part of brilliance is the humility of knowing what you don't know. And there are limits to what Capital knows about RIAs and how we continue to stay real-time ahead of what those needs are as they evolve and so we established the Advisory Board.

And Kurt mentioned good timing. Both RIA Insider and the Advisory Board started in March of this year, not by any foreknowledge, but simply by good fortune.

We assembled nine of what we consider our industry-leading kind of leading-edge thinkers, they are principals, they’re founders, they’re CIOs, they’re chief operating officers, they’re third parties in industry and they meet on a bimonthly basis. We’ll meet twice more before the end of the year talking about very important things. And the important bit for us is getting that real-time insight into what's really important to clients. And so, you know, our conversations over the last bunch of months have been around that immediate shift to operating effectively through COVID and what would be the long-term implications? How do we continue to engage our clients, create cultural continuity and bring diversity into our businesses through time? Thinking about changes to the investment universe and what will be necessary there. And those elements are really what's become the foundation of what we bring to RIA Insider. So, in short, if you think about those large categories running a vibrant business, one of the things we consistently hear from RIAs is this need for help with strategic planning, for benchmarking with pure firms, for valuation. Within RIA Insider, we’ll give you access to Truelytics, which is a third-party service, allows you to enter detail on your business, get immediate look at what similar businesses look like and are doing. And if you want to look into strategic ways to increase your value or even get a valuation.

From a client perspective, we consistently hear the number-one effort that RIAs want to execute against but feel like perhaps they’re remiss in doing so — is communicating with existing clients and staying in front of potential prospects. We introduced the Marketing Lab. It's our content, it's your brand. So, all of our content, upload your headshot, upload your logo, assign or I should say assemble articles, add your commentary, pull in digital form, a PDF that works with RIAs to help them best deploy that.

And then lastly from investment perspectives — obviously, again, independent firms want to maintain their unique and client-aligned approach, their philosophy of investing, how they've committed to clients, what that means to risk and how they deliver. But they're trying to deliver that investment proposition more effectively, more efficiently.

So to that end along the portfolios lens, our portfolio analytics team partners with firms in an ongoing way.

So they work with them on a quarterly basis taking the models, understand the investment philosophy of the RIA, understand the penchant for risk or not, and then work with them directly to help provide the insight and data from our portfolio oversight group to improve their investment process and outcomes. So at the very least, you're maintaining that unique and differentiated investment process using our insight and our sweat equity to help you do that in an efficient way. And you know, I think at the end of the day, since our launch in March, we’ve got about 3,500 firms engaged in RIA Insider. It's available if you go to RIAInsider.com. We're really proud of what we've done there. I think with the Advisory Board’s help, with our consistent support, and investment it's just going to get better from here. So our vision is something that is a 2.0, 3.0 that becomes part of your day-to-day use in a really valuable way.

Tony Sirianni: I mean that's huge. I mean, Kurt, this is almost like, you know, I find, you know, in my position too I talk to RIAs all the time, and I'm lucky enough to be talking to CEOs and the people that have done it and when you get those folks in a room together a lot of good things happen.

So I'm assuming that's like you on this Advisory Board. Tell us a little bit about your interactions there and how that works because I know… I see the sun's coming on me, my, my prison cell here… but I know that that can be, you know, really fruitful for you and for all the people that are in that room.

Kurt Miscinski: Oh, without question, Tony. I feel like I'm a kid in a candy store in every one of our board meetings, and I was incredibly grateful to have been invited by Eric and his colleagues to be a part of that. You know, I've recognized literally my entire 25-plus-year career that Capital Group as a world class asset manager, arguably, some of the best research that is conducted in the industry for how to make good investment decisions. But the amount of investment and effort that they put forward to help independent wealth management firms — not just simply construct good client portfolios, but to build great firms, has been incredibly impressive.

For years, custodians, such as your Schwab and Fidelity, have done a good job trying to educate and support the independent community. I have not seen any effort like Capital’s until Capital came forth as a world-class asset manager, bringing all of its insights, all of its research to do that. We've had board meetings this year where they bring foremost experts on everything from behavioral finance, to not only how do wealth management professionals behave, typically, but how do clients behave.

They bring their macro/micro research to say where are their trends. You know, educating on novel thinking about investment portfolios. For example, our last meeting, an incredible presentation by one of Eric's colleagues talking about thinking about investments in categories of those disrupting versus those disrupted. We all like to talk domestic international growth versus value, versus core and we slice up the asset allocation universe six ways to Sunday, but oftentimes if you just take a step back some things could be looked at even more simply, and it actually opens your mind to thinking about where are fair valuations? Historically, the S&P is traded around 16 and change of earnings. It's now trading over 20 — is 20, you know, even still not fair value? Because those disrupting potentially don't have a linear path to success. They might have an exponential path to success.

So it's all these things that have come together and to be able to share that with my peers that are also on the board, it’s very insightful. I don't think I have left one meeting this year without giving great thought to what we're doing as a business, what we're doing for clients and things we should consider changing.

Tony Sirianni: Well, I think that's great. I'm impressed with it. Again, it was the kind of thing that I wish that I had had when I was starting these RIAs on my own during that perfect storm.

But look, I appreciate everyone being here. I want to make sure that there's nothing that I missed. Is there anything that you wanted to talk about? I feel like we covered a lot of good ground and understand what you guys at Capital Group are doing and I appreciate your doing this for our community, because I think it's great for RIAs all around. So, thank you both for being here. Really appreciate it.

Kurt Miscinski: Tony, thanks for having us.

Eric Grey: Thank you, Tony.