From Broker-Dealer to Boutique RIA: Why Summit Wealth Made the Leap with Randy Morris

Jack Sharry: Hello everyone and welcome. Thank you for joining us for this week’s edition of WealthTech on Deck. There’s a lot of change afoot in the independent broker-dealer world and the RIA world. Contraction, expansion, consolidation, it’s everywhere. The big keep getting bigger, but what about the small and medium-sized firms? As I speak to leaders of these firms, I hear they are in search of a welcoming home for their clients and their businesses. Today we’re going to speak with Randy Morris, the CEO of Summit Wealth Group. Randy and the Summit Wealth team recently moved their firm that was affiliated with Commonwealth Financial Network to become an independent RIA at a very interesting time. Randy and the Summit team made their move just before LPL bought Commonwealth. So it was somewhat unrelated. Randy and I are gonna discuss why he and his team made the move and we will learn it has a lot to do with building his firm for the future and into what he calls Summit Wealth 2.0. Randy, welcome to WealthTech on Deck. Great to have you here.

Randy Morris: Thanks so much, Jack. It’s great to be here and great to be part of your program.

Jack Sharry: Great, well, I’m glad you’re here. So let’s start talking about your firm, Summit Wealth Group. Summit Wealth Group has 41 shareholders as I understand it. And from everything I’ve come to learn, you could be characterized as small but mighty. Please tell us about your firm and your history and how did you get started. Please take us through your journey at a high level from when you started 25 years ago to when you decided to make the move earlier this year to become an independent RIA.

Randy Morris: Absolutely. I actually get to go back a little further than that because it was 1985 whenever I had started my own financial planning fee-based firm in Mississippi. I was working on my CFP and we decided to start an independent fee based financial planning firm in Mississippi back in 1985. And we grew it quite a bit over the years and eventually I did a lot of training, entrepreneurial training through a strategic coach and a lot of the foundation that we laid eventually for Summit Wealth Group was through the years we had there at EFP, which was a Mississippi based firm. And it was it was in 2002 when we spun off the firm Summit Wealth Group and based it in Colorado Springs, Colorado. It was around the time that the book Good to Great by Jim Collins came out. And when I read through the book, it really struck me that we had two buses at the previous firm that I had started and not a good bus and a bad bus, just two buses going in opposite directions. And so I can recall putting on a whiteboard a picture of two buses, a drawing of two buses and talking about the need really for us to separate. And in the process, we were able to stand up Summit Wealth Group, I guess 1.0, looking back on it. That was 2002. And a large, large reason, I’d say the impetus for us being able to do that was we wanted to continue growing. We felt like growth was paramount not only to take care of our clients’ needs in the future, but also the team members that we would add, eventually the advisors we would add. We felt like a growing organization was one that people wanted to be part of. And clients can sense, you know, when they’re being taken care of, people who are really enjoying what they do and being stretched in a good way. And so we stood up Summit Wealth Group in 2002. Again, largely having a foundation at the previous firm enabling us to be able to do that. And so that was the beginning. That was the genesis of Summit Wealth Group. That’s how we got started. We use a lot of the principles we’ve learned from strategic coach, including things like unique ability. So we really took that to heart. And today we have 23 advisors and I believe 47 support staff. So we really believe in finding people who want to pour themselves into their unique ability. If we can free up advisors to spend 80% their time doing what they do best and then surround them with a team who are doing what they do best. You have individuals as advisors who are not getting burned out. You’ve got team members who are using their unique abilities, so they’re energized with their work. And the ultimate winner is the client. The client is the one who’s being served by people who really love what they do. And so if you looked at the philosophy behind the scenes, one of those elements would be this element of unique ability and providing a team approach to solving client issues.

Jack Sharry: Interesting. One of the things is you and I chatted the other day just getting to know one another. A couple things stood out. It sounded like the industry keeps getting consolidating, gets bigger and bigger. You kind of weren’t so interested in the bigger and bigger part. You were interested in really that unique ability to serve your clients. So along those lines, you wanted to work with a firm that would listen and provide more personalized services, what you had shared with me earlier. You wanted a firm that you would affiliate with that had a great set of investment tools and capabilities. And you wanted a partner that had the technology to help you better serve your high net worth clients, families today, and importantly, as you wanted to grow in the future. So given there are so many high quality choices available that you might affiliate with, tell us about your thought process and how and where you landed.

Randy Morris: You know, we had just a short period of time to make several very key decisions, Jack. And one of those was choosing strategic partners that we would partner with. And one of those happened to be on the custodian front. And so we interviewed several firms. And there’s some really top-notch quality firms that are out there. I’m so thankful that one of the firms that we were encouraged to talk to was SEI. We knew them from the separately managed account, TAMP space, as a really good investment manager. But we weren’t that familiar with their custodial services. And so when we decided to interview them as well as a few other firms, they quickly jumped up on our list to where we were strongly considering the possibility of working with them. And one of the key points that, looking back on it, that we felt that we were looking for was a boutique firm. That’s what we describe ourselves as, you mentioned small but mighty. I appreciate that description. But, know, I think of us as a boutique firm and I know that where we were coming from at Commonwealth that was their reputation. And as we look back at what we really appreciate about Commonwealth in early years was the boutique aspect. And so what SEI had to offer us in that regard was truly something we were looking for. I wasn’t sure at the time, you know, we would find it. But really, it was more than a custodian. It was really a partner who could come alongside of us. And one of the examples I would use of how they showed themselves to be that is I recall them reaching out to us and wanting to set up a call with their leadership and our leadership to talk about Summit 2.0, to hear our vision for the future. And that element of active listening, because I had mentioned at some point, I must have mentioned Summit 2.0 to them just like I did to you and you recalled it. They reached back out and again, because of their willingness to really be a partner, come alongside of us, which to me is an element of boutique-ness, if you will. That stood out to us. So it was that element was one of the one of the keys, I would say another one had to do with the trust company structure that was intriguing to us where the client assets are held in the client’s name and not in the street name. Another component was the technology piece. That’s overwhelming. When you leave an independent broker dealer who has provided a lot of the technology support for years, and you’re moving on to this RIA platform, there are several decisions you’re needing to make. And so being able to have SEI provide us with not only strategic tech decisions already made that they had put into place, but also consulting advice for us regarding tech decisions we needed to make going forward. That was an important component, you know, in this decision. And then I’d say the other element that we took into account was that because of their technology commitment, we saw some applications on the investment solution side of things as it related to our higher net worth and in some cases, ultra high net worth clients where they could provide some tax strategies, very proactive tax strategies that are adding alpha, tax alpha. And that was intriguing to us and definitely caught our attention. And so finding this partner that we could put on our platform to begin with and launch, helping us launch Summit 2.0, I feel like we found that in SEI.

Jack Sharry: You know, it’s interesting. I’ve been going through a similar process as you know, LifeYield was acquired by SEI. So I’ve been trying to get to know the story. I’m now out in the marketplace promoting it. We’re getting a great reception for all the reasons, by the way, that you just highlighted. I wanted to have somebody that could have the plumbing and wiring and piping and so on for a custodian that had investment solutions that made sense. And of course I’m heartened to hear and was heartened to hear when we first, and of course, SEI actually was a client going back six years. So I was familiar, somewhat familiar, but got a lot more familiar over the past few months. Just all the stuff they did around taxes. It’s just a lot more than frankly I know of anyone else doing. So talk about that if you would, just what you found there, particularly as you go to serve your higher net worth kind of clientele.

Randy Morris: We’ve always done tax loss harvesting, for example, with our clients near the end of the year. It’s been a very manual process to this point. And when you’re serving as a firm, you know, we have 3,500 clients across the country. And so trying to do that manually and each advisor taking the responsibility for that and their team is an overwhelming process. And so to have the accessibility to an automated process. And not that we’re going to completely disengage from what we can be doing from a tax perspective, but to have a large part of what we can add in terms of value to the clients being done on a proactive basis, automated, that is extremely attractive to us. And so for us, part of the value add we’re providing our clients in the holistic planning we do is definitely in the tax area. And so our goal, anytime we have an opportunity to reduce the tax burden on our clients, that’s something that resonates obviously not only with us, but with them.

Jack Sharry: Sure. Many studies indicate taxes are the most significant expense people have as they move toward retirement and through retirement. It’s just the reality. So good on you for making that a priority as you made your choices. So I want to talk a little bit about your culture. I was intrigued by what you shared with me in terms of your team. And you said it really came together around this decision. Talk a little bit about that, about how you all collectively made the decision to make the move.

Randy Morris: Sure, absolutely. Again, I’ll go back just a little bit because we’re very much of a stakeholder driven company. Out of our 70 employees, 41 are stakeholders in the firm, shareholders in the firm. Many of those are employees behind the scenes, are doing incredible work. And we’ve been very fortunate through the years to build this culture very intentionally. So, as you bring in, you know, we have 10 offices across the country today. We’re talking with several more that hopefully will be joining us later this year. And so when you do that, as you know, this industry breeds a culture of silos. We are the anti-silo company. I remember one of our, we get together every summer, our entire team gets together in Colorado. And one summer we had t-shirts printed up with a picture of a grain silo on the t-shirt and a red line marked through it. And so we have done so much over the years to try to mitigate the temptation to become silos in these branch offices and just the nature of a type A, you know, independent advisor. And so, over the years, we’ve been very intentional with that. And so when we approach this idea of starting Summit 2.0 and setting up our own RIA and unplugging from our independent broker dealer of 23 years with a little bit of fear and trepidation. What I would always go back to is this culture that we have at Summit. It’s an amazing culture and the team that we have, you ask them to within, in essence, 90 days to pull together all of these decisions and work with 3,500 clients and over 10,000 accounts. And you just go on down the list. It is a remarkable feat for us to be here today and be smiling and to feel really good about where we’ve come from. And I think so much of that goes back to the culture that has been nourished. And we don’t want to lose that. You know, we’ve been very intentional in our growth over the years. And we have, we call it six essentials, almost like pillars of effective merger relationships. And in those six, the very first one, and it trumps everything else, is the cultural alignment. Because you can have everything else on that list. You know, the others would business model compatibility. That’s consultative type of approach. You could have a growth mindset. You can have a five year time horizon commitment, you know, from the leaders in the organization. It’s got to make financial sense. We were looking for leadership potential, you know, not only in current roles, but future roles of leadership in Summit. Those are all extremely important. That’s five of the ones I just listed. But the one that trumps everything else is the cultural alignment, because what we’ve built to this point, we want to be very, it’s precious to us, it’s something that we really value, we want to be very protective of it. And so in this process, what we learned is our team really has bought into the fact this is their company, they view this as their company, and that’s helped us with a successful transition to this point.

Jack Sharry: Well, as I do my back of the envelope math, more than half of the employees are owners, are stakeholders in the organization. That says a whole lot. And I’m not sure which came first, the chicken or the egg, but the idea of people operating as owners just makes a whole lot of sense. You can feel it, I’m sure, in terms of what your employee experience… actually, your client experience is, as employees are all in on what you’re doing.

Randy Morris: Yeah, you’re exactly right. And to me, there are several ways you can do this. In our M&A activity, we have been very intentional. Again, once we find partners that will be great fit with Summit, we provide them opportunities to be owners in the organization, in essence, transferring a good part of their ownership in their business over to Summit stock. And we’ve been doing this for a number of years. This is not new to us. So we’ve had that in place for a long time. We started our stock purchase program, or stock purchase plan for our employees back about six or seven years ago, providing them discounted opportunities to own stock in the company. And we have a stock appreciation rights program, which allows us to grant shares of a SARS, as we call them, stock appreciation rights to our top performing advisors as well as support team. And so the combination of all that has created, I think, very much of an ownership mindset within Summit.

Jack Sharry: Yeah, that’s great. I’m seeing the same as I settle into SEI. I’m sure you’ll find as you get more and more into the SEI culture, it’s a very aligned culture. They really want to do good work across the board for their clients and their clients or of course advisors, trust companies, what have you. So I think you wound up in a good spot. So what’s next? I know you’ve got some settling in to do. You’ve had a whole lot of work, I’m sure, over the past many months as you’ve converted from a broker dealer to a RIA but what’s next? What do you have in mind? What’s coming up?

Randy Morris: Well, we want to continue the organic growth path that we’ve charted and have been successful with. Our infrastructure inside of Summit has been attractive to a lot of the M&A activity we’ve been involved in. And that part of the infrastructure includes our own marketing team, for example. And so we do a lot of very proactive search engine optimization, SEO work, in each of our markets. We get significant number of leads, pretty surprisingly, from Google, for example. Never thought I’d be able to say that, Jack, you and I have been around the block for a few times, but one of our largest clients in our Scottsdale office came through a Google lead, and so those opportunities are there with our infrastructure. You know, we have our own financial planning department staff at CFP, we’ve got HR operations, and then coaching and mentoring. All of that is infrastructure that we have in-house helping really drive our organic growth. But it’s the inorganic opportunities that we saw out there is one of the reasons why we decided to go with Summit 2.0 is we thought setting up an RIA, that’s really where the puck is headed in essence in this industry. And the opportunities for us to talk to firms across the country that are top notch, that have built great businesses. What we’re about is building a better business. And what better way to do that than to bring in partners who already have been doing this in their own location, for example. But we want them to be willing to come in and share best practices, like being part of a large study group where you can come together and share what’s working for you and build a better practice. And one of the things we do each year in the fall is a business planning retreat where we get together all of the different offices and our department heads. We work on and annual business plan. And really you come away from that time together just knowing we’ve got some great ideas that we can implement back in whatever office we might be running. And so, you know, we’re excited about the opportunity to continue expanding and growing. But again, you know, we’re going to do it at a very intentional pace because we want this culture to stay unique and we don’t want to lose that. And so these opportunities that we’re exploring, it’s got to make sense for both parties and so that’s what I see in the future of Summit is we’re building, we’ve got a great foundation. We’re so thankful for the blessings that God has given us to get to this point. And as we build onto that foundation, we’re on this first floor, we just see, we’ve had some great years behind us, and I truly believe our best years are ahead of us.

Jack Sharry: Yeah, that really sounds it. So any things we haven’t covered or any key takeaways you want to leave with our audience?

Randy Morris: You know, I was thinking about that. I was thinking, what would be kind of the key takeaways and things that we’ve already talked about perhaps, maybe reinforcing it? And one of the things I thought about is there’s a tendency when you’ve been successful, you’ve built a successful practice and your clients are happy and the market generally is doing well to just kind of settle in and to certain extent, maybe fill up the moat with water, pull the drawbridge up. And I would encourage listeners to buck against that. I think you got to be willing to make a change to continue growing. Your team will love you for it. And your team will rally around this. That’s the thing I would say is a lot of us are intimidated that a decision like this of lifting out of the independent broker-dealer space and setting up your own RIA is overwhelming. And you think there’s no way our team is ready for this. You might be surprised. Be willing to take a risk. That’s one of things I was thinking about. Secondly is look for strategic partners. You can’t do this alone. And we’ve been able to, we’ve been very blessed to have some very strong strategic partners that come alongside of us to help us in a lot of our decision making. And so look for those strategic partners. They’re out there. They want to partner with you. And the third one is just don’t discount the importance of intentional community. Just, people are looking for community. Advisors are looking for community. They want to be part of something bigger than themselves. And so just the encouragement to be very intentional with getting your teams together and making sure those silos don’t develop.

Jack Sharry: That’s great. That’s great. Well, great observations, great advocacy. So, good for you and love the story. Love how you guys are growing and evolving. So one last question before we say farewell for now. And always my favorite question when talking to someone like you. Randy, what do you do outside of work that you are particularly excited or passionate about that people might find to be interesting or surprising?

Randy Morris: Well, this is the middle of May and in about three and a half days, we are heading up to the high country of Colorado where we will be in Durango for the summer and fall as a base. I’ll be working from there. My wife and I love to hike. We love the outdoors and whether it’s hiking here in the desert of Scottsdale, Arizona, and there’s some real beauty around us most of the year. We love to do that and then be able to do that in the mountains of Colorado. It’s pretty incredible. So very very blessed with that. But one story I need to share with you that I would be remiss in not sharing and that is we have a Brady Bunch family. You know, we’ve been married 18 years. We have three kids each, so six kids between us. No Alice came along. I don’t know why Alice didn’t come on the journey here with us, but she did not. But the six kids did and we have 12 grandkids. So you can imagine that spare time when it’s not hiking perhaps or even golf, it’s time with our kids and grandkids, which is a real joy of my life. So glad to share that part of my life with you.

Jack Sharry: Yeah, and I have a similar experience. We’re not quite at 12. We’re a long way away, but maybe someday. So good for you. That’s wonderful.

Randy Morris: Thank you.

Jack Sharry: So Randy, thanks for this conversation. Really enjoyed it very much. Thank you. And for our audience, thanks for tuning in. If you’ve enjoyed our podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. You should also check us out on our dedicated website, wealthtechondeck.com. All of our episodes are there along with blogs and curated content from many folks around the industry. Randy, thanks again. This was a real pleasure. I really enjoyed it.

Randy Morris: Jack, you made it easy. Thank you so much.

Jack Sharry: Sure, thanks.