Here comes the sun; the first June weekend is upon us!

Pack up your picnic baskets, don the full-brim straw hat, slather on the SPF 50, and prepare to make this a great summer.

This week’s edition of ‘Connected’ will tackle how the concept of ‘exponentialism’ can and should be relevant to building a wealth management business. We will delve into how to magnify growth and embrace guiding frameworks that can help you achieve a better way to grow.

What’s hot in this week’s issue:

Take a peek into KVP’s world as he juggles business and life, all while discussing the future of data-driven experience design with Brad Johnson from Triad Partners.

Exponential RIA, a buzzword or an attainable reality? Cut through the tech jargon and dive into tangible ways your business can surf the wave of exponential growth.

The AI genie, ChatGPT, is out of the bottle and it’s already sub-advising over $14M in assets while JP Morgan is filing patents on their riff on OpenAI running a strategy. Get inspired by the user-friendly design of an AI-driven asset management experience and consider ways to declutter your own.

In a major industry shift, Orion’s founder, Eric Clarke, reveals his next big move. Understand the impact this could have on the industry and deeply dive into Eric’s remarkable journey via a candid chat with one of my favorite Raleigh-based advisors.

Grab that sweet tea and lets dive in. 🥤

On the Pod

Milemarker’s CEO, Kyle Van Pelt, hit the Do Business. Do Life Podcast. Check out his episode on the link below.

Riding the Wave of Exponential Growth: A Guide for RIA Owners to Build an Exponential Firm

Imagine a small team of twelve individuals huddled together in a modest office space, their eyes alight with the spark of innovation. Fast forward a few years, and this relatively tiny team has built a platform that would revolutionize the way we share and consume visual content. This is the story of Instagram, a billion-dollar company that started with an idea and a dozen dreamers.

Instagram’s journey is a testament to the power of innovation, vision, and the right team. In 2010, Kevin Systrom and Mike Krieger launched Instagram, as a simple photo-sharing app. The small team worked to create a platform that would allow people to connect through the universal language of images.

The interesting thing about Instagram is that their original team was not at all too different in size from a mid-size RIA. If you boil it down, their executive team looked like this:

Kevin Systrom: Co-founder and CEO. Systrom was responsible for the overall strategic direction of the company. He also often took on other roles, as needed.

Mike Krieger: Co-founder and CTO. Krieger handled the technical aspects of Instagram, including developing the app’s infrastructure and overseeing its engineering team.

Shayne Sweeney: Engineer. Sweeney joined Instagram as its first employee and engineer. He worked on the backend and mobile software development.

Josh Riedel: Community Manager. Riedel was Instagram’s fourth employee, managing the growing community of users and curating content for Instagram’s blog and social media channels.

Jessica Zollman: Community Evangelist. Zollman joined Instagram in 2011 as its fifth employee. She worked closely with Riedel in managing the community and helped with public relations and marketing efforts.

Bailey Richardson: Community Team. Richardson was one of the early employees who helped manage the rapidly growing user community.

If you swap out Mike Krieger with a Chief Investment Officer and focus Josh Riedel on client service, this team is increasingly similar to what you may have at an RIA today.

With this organization, Instagram reached exponential status and today contributes to over 100B of Meta’s market cap with two billion daily active users (25.62% of the entire world’s population).

In his book “Exponential Organizations,” Salim Ismail defines an exponential company as “one whose impact or output is disproportionally large compared to its number of employees or resources, due to the use of new organizational techniques that leverage accelerating technologies.”

Recently Salim spoke about the current moment we find ourselves in today. In short, he stated that currently, we have 20 different Gutenberg moments happening all at once. The move to remote first organizations, ChatGPT, solar energy, blockchain, etc. are all notable changes to the world in one way or another, all at once.

We are in a moment that can radically reshape how we work and has the power for us to refactor our organizations to be much more nimble, impactful, and able to reach a massive transformative purpose (MTP).

Perhaps it’s the mindset that we all need to take as we meet our clients where they are and serve people, but most wealth management firms have very modest philosophies about the success they want to achieve relative to other industries. Most of it is marked by our AUM growth, our unique planning philosophies, and investment ideologies.

In my experience, most advisors are on a treadmill that seeks a 100M, then 200M, then 500M, then 1B. The next tranche takes our minds from 1B to 5B; at which point, we don’t have time to take in too much joy as we are on to 10B.

The problem with this is that we are putting ourselves and our teams into someone else’s straight jacket, and at the end of the day, is the product and experience we are producing anything of tangible distinction?

Is it remarkable?

How can we make an RIA exponential in 2023?

In Exponential Organizations, Ismail identifies the foundational distinctions for achieving exponential status. Exponential Organizations are divided into two categories: the “SCALE” attributes and the “IDEAS” attributes.

SCALE is an acronym for the external factors that can help an organization scale:

Staff on Demand: ExOs leverage external resources and talent as needed, reducing the need for full-time staff and increasing flexibility.

We see this today with the emergence of ‘fractional’ options to life your staff. Brian Portnoy’s Fractional Chief Behavioral Officer is a great example. Diana Cabricas is another leader who recently offered an Outsourced Brand Evangelist service that builds on her expertise and success at Snappy Kraken and offers a similar service to the industry at large. At Milemarker, we supply RIA’s both with Charter – our managed tech stack and back office solution and our Fractional Chief Data Officer to help firms gain scale without adding staff.

Community & Crowd: ExOs build communities and tap into the power of the crowd for tasks like problem-solving, funding, and innovation.

As I look at various firms looking to increase their values, the firms that have built a brand and a community demand a higher value. They also possess stairsteps that will allow new customers to be acquired via a free or low-cost offer and move up a value chain when it makes sense.

Algorithms: ExOs use algorithms and data science to support decision-making and automate processes.

The top firms are investing in unique ways to look at their data and logic and are using that to help advisors understand the value of their book of business vs. a fat check offered by a wirehouse. They are also creating unique algorithms to help communicate payouts and commissions.

Leveraged Assets: Instead of owning assets, ExOs access or rent them as needed, reducing overhead and increasing flexibility.

From flexible offices to fractional partnerships, RIA’s have a huge potential to leverage various solutions that lower your overall commitment and multiply your flexibility and output.

Engagement: ExOs use digital engagement tools and techniques, like gamification and incentive prizes, to engage customers and other stakeholders.

While I believe gamification is a joke for most of wealth management, we can find a lot of value in experience design. United Capital did a tremendous job of implementing their simple Honest Conversations playing cards years ago, and they have had a massive impact in delivering tangible value and engagement to investors and guiding planning conversations.

IDEAS is an acronym for the internal organizational mechanisms that ExOs use to maintain an innovative culture and rapid decision-making:

Interfaces: ExOs have well-defined processes for interacting with community and crowd resources.

Today’s firms have too many logins and rarely have a tightly-knit client experience. Tremendous exponential value can come from investing in your interface – both for your clients and advisors.

Dashboards: ExOs use real-time metrics and dashboards to measure performance and make data-driven decisions.

The beauty of our industry is how measurable success can be. Peter Drucker famously stated, “What gets measured gets managed.” What should you be measuring at your firm, and how can measuring this impact your actual impact and experience? You know those metrics if you are like the firms we engage at Milemarker. Finding them is the challenge.

Experimentation: ExOs foster a culture of innovation and learning through rapid experimentation and iteration. I rarely find firms that have given themselves the freedom to experiment truly. This exercise creates terrific learning experiences that will positively modernize the preexisting areas of your business.

Autonomy: ExOs operate with a decentralized authority structure, allowing for faster decision-making and greater agility.

The challenge here is that most firms don’t have a solid bench of talent. I highly recommend advisor take a queue from my old firm, Carson. At Carson, we continually invested in the next generation of team members. The rotational internship program allowed college students to rotate through key facets of our business and ultimately find the area that resonated most with them. Those interns are now growing leaders who are whip-smart and energize the industry with fresh thinking and skills.

Social Technologies: ExOs use social technologies to improve organizational communication and collaboration.

Highly biased take here.

While I know that Microsoft Teams is the default tool for your IT Suite, my experience has seen that it doesn’t foster the level of organizational communication that multiplies creativity and community. MS Teams is far more transactional than transformative. It also lacks the key third-party integrations that make your communication truly become the central hub of your organization.

Slack connects teams, partnerships, projects, and momentum. Do a trial/experiment with it, and you will feel the difference.

Finding Your Exponential Edge

One of the major drumbeats in my mind daily is the idea of opportunity cost.

Seth Godin defines Opportunity Cost by saying, “Doing nothing is expensive. Opportunity cost is the value of the lost opportunity, the benefit of what you could have done instead of what you’re doing now.”

So let me wrap up with this question.

What are you leaving on the table each day if your firm doesn’t embrace at least some of the principles of exponetialism?

If nothing else, you may be missing out on some of the most fun you can have building a business.

I would love to hear which of the SCALE and IDEA attributes you have in motion already.

Highways and Byways. Quick Takes on Industry News.

Autopilot + ChatGPT = Your New Subadvisor?

Now managing over 14M, Autopilot has built a strategy that will automatically rebalance your portfolio based on an OpenAI analysis of market trends. While this may create all sorts of thoughts, the most notable thing here is how beautiful the user experience for this application is and how well it connects to your brokerage account.

Being mobile-first, the minimalism of this experience provides really good insight into how we ought to be thinking about simplifying the way that we communicate with investors.

THIS IS NOT INVESTMENT ADVICE, FOLKS.

Eric Clarke Announces His Pending Departure

This headline gave me all sorts of feelings. Eric is someone who had a massive impact on my career. Working alongside him for the better part of 14 years shaped how I work and how I see the opportunity to serve advisory firms.

If you don’t know Eric, this interview done by my friend Josh Self is a really good look at Eric’s life and the evolution of Orion. Also, Josh Self is a solid person for you to know.

I hope you have a great weekend- don’t forget to reapply that sunscreen early and often. 🕶️