· Kurt MacAlpine
You're not collaborating and problem-solving together across the firm. That's limited based upon the silo that you ultimately work in. So, when I step back and look at those three things, tremendous amount of tailwinds, an industry with a barbell-like structure that's ripe for disruption, and an operating model, call it, which I believe to be fundamentally flawed. It just creates an opportunity, in my opinion, for somebody to come in and disrupt that, with the goal of doing more things for clients.
· David Senra
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· David Senra, Kurt MacAlpine
So, before we get back to going into this existing structure with these ideas and this understanding, where did this flawed... Like, the difference between you're not building a company, so you have a platform. What is the history of this, then? Where did this come from? Why was it set up that way to begin with? [00:00:00] S1: It's a great question, and I don't know the answer to why it was set up that way to begin with. But it's the business model that all large wealth managers seemingly have taken. And when I look at that, and if I step back for a second and say- Put aside the structure of wealth management, but what are wealth advisors ultimately doing for clients, and what service are you providing? And I think about the role that wealth advisors play as kind of the ultimate human capital business, right? In order to be good at the job, you need a tremendous amount of EQ, a tremendous amount of IQ. How those advisors pair that together to work with clients is ultimately what defines success. So, if I park the structure that the industry has chosen and look at, well, how are other human capital businesses structured? They all kind of have the same underlying structure. So, as I mentioned, I was a partner at McKinsey & Company. Every single management consulting firm's a partnership, every law firm's a partnership, every accounting firm. Many of the most successful investment businesses, advisory businesses, operating companies are partnerships. [00:00:00] S0: But wait, the wealth managers weren't.
· David Senra, Kurt MacAlpine
[00:00:00] S0: But wait, the wealth managers weren't. [00:00:00] S1: Weren't. So effectively, to wildly overly simplify the Corient structure, we created the first true professional services partnership and applied it to the wealth management industry. And the goal was to use that structure to create a fundamentally different experience for clients, and ideally, a much more attractive collaborative environment for colleagues, and given it's a partnership, ultimately owners of the business as well. [00:00:00] S0: Okay, so let's go back. You have this idea. You're like, "I'll take the job, but I have a super aggressive plan." [00:00:00] S1: Yep. [00:00:00] S0: What's the response of the company? [00:00:00] S1: So, that was part of my pitch as part of the interview process to the board, was they had asked my opinions, obviously, as part of that, on the future, how I saw the future direction of the company. I outlined a strategy. Probably one of the core pillars of the strategy was to effectively launch the business that's Corient today. Fortunately for me, I had a phenomenal board. The board was comprised of significant owners of the business who had a tremendous amount of vested interest in the company, but were also great at delegating, but also collaborating and providing advice. So, it was very welcomed. And because we had such a transparent conversation around what the strategy will look like as part of my interview process, we were able to hit the ground running from the day that I started.
· Kurt MacAlpine, David Senra
[00:00:00] S1: So, that was part of my pitch as part of the interview process to the board, was they had asked my opinions, obviously, as part of that, on the future, how I saw the future direction of the company. I outlined a strategy. Probably one of the core pillars of the strategy was to effectively launch the business that's Corient today. Fortunately for me, I had a phenomenal board. The board was comprised of significant owners of the business who had a tremendous amount of vested interest in the company, but were also great at delegating, but also collaborating and providing advice. So, it was very welcomed. And because we had such a transparent conversation around what the strategy will look like as part of my interview process, we were able to hit the ground running from the day that I started. [00:00:00] S0: Weren't you running a similar idea or playbook to the original founder of that company too? [00:00:00] S1: So, it's interesting. So, you're probably referring to Bill Holland, who was a previous CEO, who was the chairman of the company. [00:00:00] S0: Okay. [00:00:00] S1: So, Bill and Ray Chang, and Ray's daughter was on the board with us ultimately as well, had done a tremendous job of effectively building scale in the Canadian asset management industry. So, at the point in time, they saw an industry that was subscale, ripe for disruption, and took advantage and built- [00:00:00] S0: They did that through acquisition?
· David Senra, Kurt MacAlpine
[00:00:00] S0: They did that through acquisition? [00:00:00] S1: Through acquisition, through a series of acquisitions in the Canadian marketplace, focused on the mutual fund industry, and did an amazing job with it. And a lot of that kind of put CI in the privileged position that the company was in at that point in time. [00:00:00] S0: And so, something you repeated when we spoke previously is like, I don't remember the exact line, but basically, you think the most dangerous thing that you can do is stand still. [00:00:00] S1: Mm-hmm. [00:00:00] S0: And like, the biggest risk is taking no risk. [00:00:00] S1: Yeah. [00:00:00] S0: So, they're in a dwindling, what sounds like a dwindling business. [00:00:00] S1: Yeah. [00:00:00] S0: So, what are you going to just sit here and just take less money every year, or are you going to do something drastically different? [00:00:00] S1: Yeah, and I think that, to me, I always tell people, oftentimes people get comfort when things aren't changing. That's when you should be the most uncomfortable. Look at the business you're in, right? It's just everything is changing around us at all times. And so, I'm the most nervous when things aren't changing. And ideally, the change is happening. So then the question is, are you leading the change, are you participating in the change, or are you disrupting the change? And I think you're always better to be the one pushing the change forward on behalf of the firm or the industry.