On this week's episode of the Financial Planning Podcast, John Wernz explains why the key to sustainable organic growth is embracing reinvention.
Wernz is an executive in residence at Great Hill Partners, a private equity firm that invests in high-growth, disruptive companies. He joined the Great Hill team over the summer after a 13-year run as chief marketing officer and interim chief growth officer of Wealth Enhancement Group.
Wernz is also a co-founder of and currently serves as an executive director for wealthtech company Datalign, an advisory board member for LifeYield and as a member of the Choice Bank board.
During his career, the through line has been helping the organizations he represents add billions of dollars to their earnings through multichannel growth strategies. But he warns that there is no silver bullet, and the road to growth will have plenty of potholes along the way.
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Wernz talks about the common mistakes firms make when pursuing organic growth; why early stage growth is so exciting; and how a nudge in the right direction from his big brother has led to a 20-year career he can't get enough of.
Listen to the new episode — as well as to all future and past episodes — by subscribing to the FP Podcast on
Transcript:
Justin L. Mack (00:03):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host Justin L. Mack, and it is my pleasure to introduce this week's guest, John Wernz, an executive in residence at Great Hill Partners. John, thank you so much for joining us on the show this week.
John Wernz (00:18):
Justin. Thanks for having me. This is already fun. I'm really looking forward to talking.
Justin L. Mack (00:22):
Absolutely. Now John brings to this week's pod nearly 30 years of industry experience. He joined Great Hill over the summer after more than 13 years as the chief marketing and interim Chief Growth Officer of Wealth Enhancement Group, an independent RIA based in Minneapolis. During his run at Wealth Enhancement Group, John developed and executed multi-channel growth strategies that resulted in the firm's expansion from $2 billion in AUM to more than $50 billion in AUM. That's a lot of expanding. Before that, he was the chief advertising officer at Marketing Architects, a national marketing agency that specializes in customer acquisition programs in the financial services industry. He's also the co-founder of Dataline, a wealthtech company that connects users to financial advisors. John's also on the advisory board of LifeYield and is a member of the board of directors of Choice Bank. So a very busy guy that I'm glad we get to sit down with this week.
(01:15)
But today we're really going to focus in on that growth expertise. Like I said, during this time at WEG, they went from two-billy to 50-billy. That's not a small jump, so it's safe to say he knows a thing or two and picked up a few tips along the way. Tips that we're going to share a few of on this episode. But John, as a newcomer to the Financial Planning Podcast, I always have a toll that people have to pay first. We've got to roll the clock back. Start at the beginning. Tell me a little bit about how you got into the world of financial services. Is it something you always wanted to do or had a passion for, or did you have a different path that led you here?
John Wernz (01:50):
Yeah, I think I came from outside the industry and there's more and more of us. I've been in it for 20 plus years now and I still feel like a newcomer. It goes way back. I was in college, I was studying marketing and finance and I have an older brother and he's an ad guy. And as an ad guy, he was the kid who could draw. He was the older brother who was a kid who could draw. I was good at math and so he was looking at me. He said, you're not an ad guy. And I said, I'm not. He said, you're not creative enough, you're not cool enough. He said, but this marketing thing I think, and especially direct marketing seems like a good fit for you. So it was that nudge from my brother way back in the 90s. I was doing catalog marketing, continuity marketing, direct mail, kind of old school marketing in the beginning of digital.
(02:33)
And as you referenced, I jumped into a firm named Marketing Architects and it was another great growth story of a small firm. We started at under $10 million in revenue and ended over $150 million and a lot of that growth was doing customer acquisition programs. So our specialty was how do you use different channels to drive clients? And coincidentally we ended up, we did all different areas. We were selling lasik, we were selling all kinds of stuff, but we did a lot in financial services, a lot in insurance, and specifically Fisher Investments was a large client in that time period and it was a time where they were diversifying from their great direct mail background into all of these other channels. And so that's really where I cut my teeth and got into marketing to start.
Justin L. Mack (03:14):
Very cool. And like you said, you kind of feel like an outsider to the industry. I feel a little bit of kinship there being here at FP, but prior I was in the newspaper business. So I feel like when you have almost an outsider's focus, you get a chance to learn every single day on the job. And I imagine it's similar to you even after so many years. I imagine it's always learning something new and taking your different perspective in applying it to the industry. How's that been for you as far as having a chance to show that creativity by just being a little bit different than some of the other folks in the industry?
John Wernz (03:45):
I think financial services is behind in marketing and has been for years and years and years. It might be catching up finally, but it has been traditionally buying. I think that's because of a lot of the structures. I mean if you think of the lone wolf out there that works for Ameriprise or Merrill, it's not really a closed system loop of marketing, right? They're out there, yes, they do paperwork and they align, but they're really on their own from theirs phone book, it's friends, it's family, it's that, and with the way the industry is developing between the growth of the RIA segment and some of the improvements in the broker dealer segment firms now exist like Fisher did 20 years ago where there are more and more firms capable of doing really savvy marketing. And so while it's been behind, we're catching up. I do love it though, Justin, because when we do things in financial services marketing that are commonplace in other industries, people are like, oh my gosh, I can't believe you guys did that. And I'm like, sorry, if we were in healthcare, you guys wouldn't be that impressed. But in financial services we are. So I would argue it's a great spot to be as a marketer.
Justin L. Mack (04:43):
Right on. Right on. Not so much as reinvent the wheel, but just show 'em the wheel. There's wheels out there, guys, take a look! Really cool. So tell us a little bit about the work you're doing not only at Great Hill Partners, but on the many boards you serve.
John Wernz (04:55):
It's been a great experience. I am on a number of boards as you referenced. Actually, another one has been added even since we talked named Testimonial IQ, which is in the really exciting space with all the rules changing around compliance-driven testimonials and how to do that really well. When I worked with a firm named Dataline, which is in the lead gen space, and I worked with Life Yield Reference, which is really about how to minimize tax drag in a multi-account environment, the thing that strings all those togethers is organic growth. When I see those firms, I see tools that firms could benefit from to grow organically. And so that's really been the through line of what I work on as that goes all the way to Great Hill.
(05:40)
Great Hill is a private equity firm as many know the story of Walton Hansford group, phenomenal growth story, but also a phenomenal culture and grew through many different partnerships with private equity and is really a case study for having great relationships with private equity. I know that's not true of everyone. Sometimes people hear private equity and they go, my gosh, they're going to come in and steal all my money and do a financial rollup. And certainly maybe there are some firms that do that. Those are probably the best fit for most firms. But there are a lot of firms that do a really great job of helping to grow firms. Why Great Hill? What we've been up to is we're seeking to partner with an RIA in the space that really wants to take their growth to another level, specifically around organic, which is why they were interested in me. So the fact that I have that strong organic background really helped to build multi-channel growth programs with a firm like WEG and before that Fisher is attractive to them. And so we're out talking to firms and looking to be more active in the space in the coming months.
Justin L. Mack (06:40):
Fantastic, fantastic. And of course, a lot of conversation in the industry about organic growth. It's like the holy grail, it's extremely important you figure that out. You almost crack the code and grow in multiple channels, whether it be your business itself, just your ability to let people know that you're out there, but it's not easy to figure out. There's no one size fits all solution. And a lot of the information that you can get if you're looking for this on your own is very surface level. You hit Google, you try to figure out some answers, and you get a bunch of lists about tips that are almost common sense. Too common sense to be helpful or applicable. So what are some of the deeper lessons you think firms should be taking heed of or paying attention to in terms of organic growth?
John Wernz (07:21):
So Justin, that's obviously a multifaceted question. I want to make sure I give a good clear answer on that because firms are in different life stages. And so I think depending on the life stage, there's different advice and content. I would say most of the content I see is really for the 0 to $1 billion firm. In that firm, they're really building that foundation. They need their brand tight. What is their unique value proposition? Do they have a good website? Are they doing some social? Do they communicate well with their clients? That's really important stuff for that firm. I think where there's more interesting content and more things to talk about is what happens in the $1 billion to $5 billion firm. In the $1 billion to $5 billion, you start to see more commonly that they might have a channel of growth. Maybe they have a great center of influence referral program or they work with a partner RIA or a partner tax firm or an accounting firm. Or maybe they're in a referral program. Or maybe they have a newsletter. Or maybe they have a radio show. But they usually have a thing. They have a thing and they have a person or two helping to build it.
(08:25)
And so in that stage, it's very manual. They probably don't have a lot of a tech stack. They probably don't have a lot of marketing automation tools. They probably don't have very advanced call routing or a large call center yet that can help schedule those appointments. And then when you get to the third, the $5 billion plus, obviously some can be built through inorganic and roll-ups, but the ones that are growing organically, now you're into multi-channel. Now you're into a place where it's like, okay, I have two to 10 different channels producing and I have built the structure to handle those from a tech stack perspective and a team perspective. So now instead of maybe two people in marketing, you might have 10, you might have 50, you might have three people running your internal digital programs, you might have three people running your referral program, you might have three people running direct mail, and you get into these very siloed areas. And that's where it really gets exciting to me. So I do think it's sometimes scary when you tell a $1 billion firm to behave like a $10 billion. It's not that easy. We all like, to your point Justin, there's no silver bullet. It's not like you're just like, oh, just turn it on. I wish it was that easy, and if it is, someone needs to teach me that. But it's that rigorous process of optimization building through those different levels.
Justin L. Mack (09:36):
Definitely. And it'd be nice if we could get a silver bullet, it'd be awesome. And what you point out is the different stages and kind of the different attention that needs to be put in different areas based on where you are as your firm, as your practice, as it grows. And it's kind of tough, and I would love to get your thoughts on it too, because when you do something, you see that growth, you figure over time I'll just figure it out because I've done it this way and it's worked. But as you pointed out, when you get to those different tiers, you have to change your strategy. So you can't continue to do what worked when you get bigger, now you've got to do something different. And that runs counter to so many other businesses or just aspects of life where it's through reps and figuring it out. This works. It's consistent. Well, it doesn't work like that in wealth management. Talk to me a little bit about how you help firms or how you've managed to help your firms and, as we pointed out with WEG, do that very successfully to kind of reinvent that growth strategy as you hit those new milestones and those new plateaus. How do you do that without getting frustrated or feeling like, man, I've got to start all over again. I just did this. How do you keep that momentum up?
John Wernz (10:38):
Well, it's a great question, and part of that is because Justin, as you know, channels burnout. So just because the channel works today doesn't mean it's going to work tomorrow. So you have to be inventing at a pace greater than those you lose. I mean, for example, we used to in my past, used to do a lot of direct response print. Imagine those kinds of full page ads with an 800 number at the bottom and a guide. Well, that was a great tool 10 years ago, 15 years ago. The decline in print has made that a very difficult channel. So you always have to be one step ahead of the curve. So a couple things to answer your question. First, do you have organizational support? And what I mean by that is you need to try a whole bunch of stuff to get a few things to work.
(11:16)
And if you don't have the support corporately to test smart test, we're not talking about flushing millions of dollars away, but to always be testing and building the next thing, you're not going to ever get the one out of three things that you actually make work. And so that comes from not just marketing, that's an organizational approach. Someone needs to be leaning into organic. Second area that I would highlight is that are you consistently building and improving? I referenced the kind of the team and the tech stack specifically. If you're just doing one organic channel, maybe you work with a third party lead provider, do you need a robust call routing call center? Probably not, right? Your email comes in that says, oh, we got a lead. Three people maybe hop on it. Whoever's available works the lead and they get it scheduled. It's a great manual process.
(12:01)
Works great when you're doing five leads a day. When you're doing a hundred leads a day or a thousand leads a day, it looks very different. And in that you're going to need a marketing automation tool, analytic tools, all of the backbone that you're going to need to really get that done. And that's a never ending game. I mean, there's firms out there that are really impressive today that they know the difference of converting a lead to an appointment if they get to that lead in 180 seconds versus 30 seconds. So if you imagine how much they have just dialed that in that process, and if you think about it, even though it could be indirect, that's who you're competing with, meaning they're making it work because they're able to get a lead and then convert a lead at a certain rate and make that work profitably, whether that's a one year payback or a two year payback, that's what we're all competing against. Even if it's not a direct company, we're all competing. Can I do this at a level in which I'm comfortable spending a lot of money and budget because I know the return I'm going to get? And that race continues. It's an arms race of who can do it the best.
Justin L. Mack (13:02):
Absolutely. Aways got to be flexible, always got to be growing, always got to be learning like we talked about. And again, I imagine it keeps your days very busy and full of, well, what do we got to figure out today? And with that, we're actually going to take a quick break, enjoy a word from our sponsors, but when we return, we'll have more this week with John Wernz, an executive in residence at Great Hill Partners. Stay locked. We'll be right back after this break. And welcome back to the Financial Planning Podcast. I'm your host Justin Mack, and we're diving right back into our conversation this week with John Wernz, an executive in residence at Great Hill Partners. And John, before the break, we talked about your path to Great Hill and of course all the other boards you serve and that focus, that through line on organic growth that has kind of always been a part of the work you've been doing. And while pursuing true, sustainable, organic growth, there are some mistakes you can make along the way. We've seen firms make them and try to recover. So I would love to get your thoughts. What are some of the common missteps that you see in the pursuit of true organic growth? And how can advisory firms avoid them? Knowing there's no silver bullet, no way to fix everyone's problems on this podcast, but what are some of the common pitfalls that people are stumbling into?
John Wernz (14:12):
Well, there's one I've been seeing and really focusing in on, and it's an age old marketing lesson, but I'll make it specific to what RIAs and what growth firms are doing today. So the age old lesson is the battle between marketing and sales and that handoff, right? And there's always is it a marketing qualified lead? Is it a sales qualified lead? Have we really moved it through the funnel appropriately? And sales think the leads are junk and marketing thinks sales sucks. And I mean, it's an all age old story, but I'm going to bring it into our specific zone. And what I mean is there are really three stages of organic marketing or getting someone through a simple funnel versus generating a quality lead. In marketing, there's a whole other conversation to have someday, Justin, about quality leads and why I hate cost per lead because it can insert lower quality leads, and there's a whole conversation there.
(15:00)
But if you think of that, step two is generating the lead to an appointment and many firms are falling down on that step. That is where you might have a call center, you might have an internal solution, you might have a person, you might have a whole group of people, you might have technology, but at the end of the day, you are trying to convert a lead to a qualified appointment at a certain rate. And to do that effectively, and I shared the story earlier before the break on the time to responding to the lead, and that's an extreme example of two firms that never really dialed in, but that is a never ending journey. And getting those people through in an efficient fashion is critically important to how the firm is structured. And then the third step and the final step is to lead the client.
(15:44)
And here's where a lot of firms will stumble as well. They might have great advisors, and those advisors do referrals. Great. And they're able to talk to their clients and they're able to grow, and they're even able to rainmake or be out there talking to people, generating their own leads. But a lot of those leads, referral leads are warm leads. They already like, oh, my neighbor loves you and so I love you too. Or I did this thing. They're already way down the sales process. So that advisor is adept at taking them from 60% down the sales process. But a lot of marketing leads are starting way back up that sales process. And a lot of advisors are not as flexible as they need to be in changing their sales process. Some can't or don't want to. I mean, you run into all different areas of advisors where it's like, my job is not to sell.
(16:31)
If you consider selling a cold lead to a warm lead, that first stage before you get 'em from warm lead to client, some don't want to do it. Some think it's below them, some think other things. And so structuring a firm to monetize and really drive through those two conversion steps lead to appointment and appointment to client is where you'll see a big difference. And so I see a lot of times where firms are kicking the marketing and depending on who owns that step, that's another conversation. I believe it belongs in marketing. A lot of firms put that in sales or if they have a different advisor network, that is where a lot of firms will fall down. It's not that they can't generate the lead or find a lead, it's that they can't get that lead efficiently from lead to appointment decline.
Justin L. Mack (17:11):
Absolutely. Absolutely. And I want to transition a bit by talking about tech, which you kind of touched on a little bit already, and covering tech for FP, it's something I'm always really interested in is how our technology capabilities and how much better things are than they used to be has changed the process and what this pursuit looks like. You even mentioned channel burnout in the fall of print and how that used to be viable. And like I said before, I'm an old school newspaper guy. I started my journalism career nearly 20 years ago in a dank newsroom when you grew by just getting the ads out and you put the Sunday paper out and then people came and then that stopped happening. So how is technology really changing, I guess, how this works? But something you said that stuck out to me is that advisors or folks who say, hey, this isn't my job, this isn't part of what I'm doing.
(17:56)
But I think with the rise of technology, there is more opportunity to reach out to so many more people because the limiters are off, the boundaries don't exist. I mean, we're doing this podcast via Zoom just like an advisor can serve a client anywhere. So I would imagine that taking a little bit more ownership of how I'm reaching out would be not only something I would want to do, but knowing that I can facilitate it through all these new tools that are at my fingertips. I'm going on and on. I'm going to be quiet. I would love to hear from you your thoughts on how technology has kind of transformed this chase and either made things easier or harder, just kind of changed the game a bit.
John Wernz (18:30):
Well, in some ways, I mean it is increasing and as everyone knows it is rapidly increasing. It is hockey sticking, sorry, I have a hockey analogy there. But it is hockey sticking and in some days it makes it harder because of what is possible and it almost becomes overwhelming. So when I talk about that, you think of segmentation. So segmentation, marketing, truth, right? If I speak more about what is interesting to a prospective client, that client is going to convert at a higher rate, that's just the truth. And now you can create so many different ways to communicate to a client. Maybe the client's interested in investment management or tax or estate planning or trusts and wills. There's so many different areas that you can start to target market to, and it can be overwhelming, right? You're generating this many segments, this many ways through.
(19:15)
What has been great is whether it's a tool like HubSpot or tools within the Salesforce environment, those tools now exist and are relatively affordable. And a lot of the technology you're seeing was things that was like, my gosh, I'm going to have to spend half a million dollars to implement X, Y, and Z. It's not that way anymore. There are many tools you can get for under $100,000 or $50,000 under $10,000 or a subscription basis. So I'm seeing that change rapidly. The other area that we will always continue to look on in any industry is the use of a call center or a scheduling center to get someone through is still a strength. Everyone is also figuring out, how do I just do it digitally? How do I just get that client to go from cold, interested prospect to ready to meet with an advisor on a through digital line? And it's not easily done and not many firms have that nailed. It is becoming more and more possible. And so you'll see, I would say if you look at Fisher Investments, I believe their call center still has well over 150 call center reps. I mean, it is a massive operation making 50 to a hundred outbounds a day. So Fisher, who is one of many leaders in the space, does not have a digital only flow. And I think we all still aspire to have that digital only flow and there's more work to be done there.
Justin L. Mack (20:31):
Absolutely. I know we'll be taking a look at that and seeing how it evolves. It's a really interesting topic and one that, again, it's so vital because it really talks to the health and sustainability of your business if you figure this out. So really cool to hear that and the passion you have for it, it definitely comes through. So with that, I want to know what you're working on. What do you got coming? It's scary to say we're coming into the close of 2023. I can't believe it's already here, and it has been a heck of a year for the markets and for this industry. So just wondering what kind of efforts you're prioritizing as we head into the wrap up of 2023.
John Wernz (21:03):
Well, this is, that portfolio approach I have is working on a number of different supporting roles within different boards. And so you see a firm, I mentioned Dataline earlier, they're in the lead generation space growing extremely quickly and continuing to evolve a model to provide really high-quality leads to firms. And that's a crowded space. And so there's a lot of discovery and a lot of things happening. And that goes back to that old kind of how do you get leads through and how do you make it really happy? How do you make clients really happy and how do you make firms really happy in that endeavor? Secondly, the testimonial space is just ripe for change. I mentioned Testimonial IQ. How do you do it in a compliance-driven fashion?
(21:45)
I think everyone loves the idea of testimonials. Everyone understands that the world is starting to live that way. And most firms are rightly like, I'm scared. I don't want to be first. I don't want to put my neck out there. I wouldn't either. I understand that. All we need is a speeding ticket. I don't want a speeding ticket. I don't want to do this wrong. And so you'll see Testimonial IQ and other solutions are growing quickly to make that. So I believe in three to five years, every firm will be like a restaurant and we'll have Google reviews and we'll have them very clear and we'll be able to see that. And that of course helps reputationally, but it also helps ss e o and helps 'em optimize their web traffic. So I mean, there's a lot of opportunity in that space.
(22:22)
I come from the school of holistic financial planning. So within our industry, there's different investment and comprehensive solutions and seeing solutions where you can generate tax alpha is a proven alpha. And when you can do it in a multi account situation, meaning you go look across everyone's accounts and say, I can get you the same place and save you a bunch of money in taxes, it's just a huge opportunity in the industry. And it's still, firms are doing some tax harvesting. Most are not fully built out in that area. So I'm trying to lean into all of those. In addition to that, I hear about new firms every day, and trying to stay on the cutting edge of it is hard. I mean, I did two or three intros with startup firms in the marketing space this week that I was really impressed with. Firms I didn't know anything about. And someone mentioned, hey, have you heard of so-and-so? They're doing a great job. And so the amount and that increasing rate, it is hard to keep your thumb on the pulse, and I've been spending a lot more time on that through the end of the year.
Justin L. Mack (23:19):
Very cool. Well, it sounds like you're going to keep busy and keep a real full plate, but that doesn't surprise me. So really excited to see what's next and what's happening for you as we close out and roll into 2024. And as we roll into the last part of this episode, we're going to transition into something that has kind of become a tradition here on the Financial Planning Podcast, which is ending with some good vibes. And we talked a lot today about organic growth both for the industry, but how that's been a part of your entire career, a career that started way back, like you said, with a nudge from your brother to get into this in the first place, and how that it's taken you to all these different places, different firms, different opportunities, different boards. So with all that considered, I got to ask, what do you love most about your job? What keeps you getting up every day and deciding to throw more stuff on your plate when you probably, if you wanted to, could take a few of those things off, you're like, no, no, no. Let me get back in the buffet line and get some more. What do you love that keeps you doing that?
John Wernz (24:14):
So I'm a marketer, right? But I got a lot of sales in me. And one of the wins of sales is getting the win. I mean, that moment where you embarrassingly when no one is looking, when you do this (fist pump) you're like, yes, that was a win. We're growing. And so I'm still addicted to the growth phase of companies and how fun that is, and it's hard and they don't all work. And there's ups and downs. But I mean, when you're on that increasing trend, it's just so much fun to be a part of. And I'm just more of an early stage person, just have to be self-aware of where I fit and what I do.
(24:55)
And so to be in these early stage firms and to be in that kind of explosive growth potential, I wish it happened every day as we all did. I love that. And that's the part where I wake up and I want more of that and helping teams do that. Being a part of those teams, working with people, seeing the joy that comes from that, helping them through the challenges and just being a part of those wins, you get that awkward, yes, we did it and every day, I wish I had a few more of these, but I'm always seeking them out every way I can.
Justin L. Mack (25:25):
Right on. Right on. For the listeners who can't see on the Zoom. He's doing the fist pump. Yeah, I understand. Getting that fist pump feeling and having a good reason to do it always feels pretty good. So I can't think of any better vibes to end than with that. And I want to thank you, John, again for taking the time and joining us this week on the Financial Planning Podcast. It's been a pleasure,
John Wernz (25:45):
Justin, thank you for all you guys do covering the industry. Thank you for covering organic, and thank you for having me.
Justin L. Mack (25:50):
Absolutely. And I want to thank everyone for listening to this week's edition of the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kevin Parise. Special thanks again to our guest, John Wernz. Rate us, review us and subscribe to all of our content at www.financial- planning.com/subscribe. For Financial Planning, I'm Justin Mack. Thanks for listening.