NTSA Wowcast 2.0
Tony Schutte Talks Crafting Successful Educator Retirement Strategies
In this episode of the Wowcast, host Randy Aranowitz interviews Tony Schutte, a financial advisor and certified financial planner with EFS Advisors in Minnesota.
Schutte discusses his personal and professional background, including how his parents' careers influenced his decision to become a financial advisor, specifically for teachers. He details his educational journey, including his early graduation from St. Olaf College due to his advanced placement classes.
The conversation covers EFS Advisors' use of an auto-enrollment program for 403(b) and 457 plans, the mechanics of it, and the challenges faced in different states due to legal restrictions.
In this episode of the Wowcast, host Randy Aranowitz interviews Tony Schutte, a financial advisor and certified financial planner with EFS Advisors in Minnesota.
Schutte discusses his personal and professional background, including how his parents' careers influenced his decision to become a financial advisor, specifically for teachers. He details his educational journey, including his early graduation from St. Olaf College due to his advanced placement classes.
The conversation covers EFS Advisors' use of an auto-enrollment program for 403(b) and 457 plans, the mechanics of it, and the challenges faced in different states due to legal restrictions.
My name is Randy Aranowitz. I am a former president of NATSA. I've been around for too long of a period of time over 30 years as a member. I've been a financial advisor for 40 years and a past executive vice president of Cades Margolis. The WowCast series. We will go ahead and have discussions with members talking about all sorts of things related to our industry. We hope you enjoy the series.
Speaker 1:I have the pleasure today of interviewing Tony Schutte. I have the pleasure today of interviewing Tony Schuette. Tony is a certified financial planner, a certified retirement education specialist. He's a financial advisor with EFS Advisors in Minnesota. Honor of knowing your parents for probably close to 30 years since I've been involved with NATSA. Kent Schuette and Lynn have been very good friends over the years and, of course, you work for an agency that is very much similar to the agency that I work for, cades Margolis, to the agency that I work for, cades Margolis. Your agency has the endorsement for Minnesota Education Association, the teachers union there. I'm certainly interested in how you utilize that endorsement in order to further your business and everything. But before we get into that, could you give a brief background of your professional career amount of assets, number of clients and when you got in the business and when you got your CFP designation.
Speaker 2:Yeah, actually we can kind of do the whole story. I guess it started with, obviously, my dad was a farmer. My mom thought she was going to be a farm wife for her whole life and then in the 1980s interest rates pushed them off of the farm with two children and he came to Minnesota and started into the insurance profession and kind of bridged out from there into financial services, of bridged out from there into financial services, and in the meantime my mom was working as a paraprofessional at a local school and she had a principal corner her and say she was pretty good at what she did and should consider getting her teaching license, and so she ended up taking his advice and pursuing that. So I've always kind of joked that, with a dad as a financial advisor and a mother as a teacher, being a financial advisor for teachers was kind of what I was bred to do. Being a financial advisor for teachers was kind of what I was bred to do. So I went to college, obviously.
Speaker 2:I went to high school, then went to college, to St Olaf, which is a private school in Minnesota, and my degree was in economics with a concentration in finance. One of my claims to fame is I did a lot of post-secondary enrollment options as well as AP classes in high school, so I was actually able to get out of college a semester early in high school. So I was actually able to get out of college a semester early. So I graduated February of 2024 and really didn't enroll in my senior semester but still had enough credits to be able to graduate. So there was a pretty good cost savings there.
Speaker 2:But at the time I was doing an internship with Northwestern Mutual Life Insurance and really liked the company but also realized I didn't want to spend the rest of my life offering people life insurance as their primary solution to their financial plan, and so from that point I didn't really want to work with my father yet being I was with the industry kind of from birth and I kind of wanted to establish my own identity. So I went to a private company and I worked for a couple of years for a rental company and I liked that too, surrounded by a lot of young people, and it was fun and energetic. But once again, early in your career you'll learn a lot of what you don't want to do, not necessarily what you want to do. So then with my father's company, an opportunity opened up that was a good two to two and a half hours away from him, so I felt like I didn't have to compete with them but could have a little autonomy and not necessarily worry about micromanagement from that standpoint.
Speaker 2:So then I moved to Rochester, minnesota, which is home of the Mayo Clinic, which is relatively famous in and of itself, at the age of 26. And the practice that was here had about two to three million in assets and a couple of hundred clients and due to some turnover, there wasn't really the greatest reputation that I was left with to kind of try to scrape together. But you know 15 to well. I started in 2006. So 18 years now I've been working at this and so today we've got a practice with, I've got myself, I've got one other full-time, I've got one that's part-time, going full-time this summer, and then another gentleman that's part-time.
Speaker 2:So we actually have four advisors, but two of them are part-time, as well as an office receptionist, and our total office is right in the $120 to $130 million range among the advisors, with me obviously having the lion's share of that, just due to my tenure with the firm and with the business. And we've turned the reputation around. We're kind of one of the leading providers in most of our major districts. We tend to have more than our lion's share of business in this area and we're always looking to grow and expand. Currently my practice personally, I'm right at about 80 million AUM and have about I think I'm right at about 1,400 clients or 1,400 social security numbers in the system, or 1,400 social security numbers in the system.
Speaker 1:How do you manage 1,400 social security numbers?
Speaker 2:Seems like that's a lot it is.
Speaker 2:It's a combination of technology and hours and having staff that you can rely on that do a good job, and I don't know that there's a limit to the number of clients if you're efficient and smart with your time and how you do things.
Speaker 2:But as the numbers grow, it continuously gets more complicated and I either have to devote more time, resources or more financial resources to a combination of technology and people to be able to manage it. But I think the biggest holdup for people is, I think, not viewing this as a business, viewing it as a job that the money that comes in is my money, versus viewing it as a business where this is something I'm trying to grow and I'm trying to make bigger and it needs to continuously be fed and watered in order for it to grow. So I've never had a lot of apprehension to hiring people and or spending money on software, because through the years when I've done it and I've had some that have worked and some that haven't worked, but the majority of them have created enough efficiencies that it's always been worth the efforts and struggles to make the adjustments or to apply the additional software packages or technology to the system.
Speaker 1:So what technology do you use to help run your practice and be efficient?
Speaker 2:Well, I have a CRM. Obviously that helps to manage the clients and the relationships with the clients.
Speaker 1:Which CRM is that?
Speaker 2:It's a Salesforce version of a CRM, and actually at the last NTSA conference I hooked up with a group that you're probably familiar with called Client for Life.
Speaker 1:Yes.
Speaker 2:And through COVID, my systems got a little mucky, not just on my end but on my client's end. We weren't meeting with people annually, we were, you know, all my clocks that were set up in the system to be able to meet with people efficiently kind of got thrown out the window. So as much as we tried to get it back on track, we almost found it easier to just kind of push the reset button and start it over, and that's what we did through Client for Life. So they've we've been contracting them for the last year to get our client reviews done, make sure that we're making the attempts, and the right type of attempts, through our compliance to be able to contact and get the reviews done, and so that's one of the more recent ones.
Speaker 2:I use some financial planning software. That's been helpful. I've tried three or four of them over the years. Lately I've settled on something called Right Capital. It's relatively easy for me to get the data into the system and that's what I was looking for. I've seen other software packages that are better and bigger, but I was looking for efficient. My clients don't necessarily need this big, huge, comprehensive plan. They just kind of need something that can show their income levels and how it will change pre-retirement versus post-retirement. And I like Excel I did it in Excel for many years but the average person doesn't and it's hard for them to see the numbers as an image versus if I'm able to use a software that can create the pie charts and graphs and show green is good, red is bad things of that nature. It was much more palatable to my clients and has helped actually help me win some business through that process as well.
Speaker 1:Are you, how are you offering financial planning services? Are you charging a fee for that?
Speaker 2:Yep.
Speaker 2:So our firm is both a broker dealer and we are a registered investment advisor.
Speaker 2:So with the dual registration it kind of creates a double-edged sword that I have the ability to offer almost anything available to my clients but at the same time we have more more intense compliance measures we have to follow, because we have to follow both sides of the laws and we're always going to take the most defensive approach, which means while something may be allowed over here and isn't over here, we can't do it on both platforms because we're trying to protect our ourselves and our clients from the compliance issues that have been plaguing our industry as of late. So I feel like one of the biggest ways I'm able to win business is the fact that I can offer everything. I'm not offering just a single widget or trying to pigeonhole somebody into the one product that I'm able to offer. So through that process I can truly, instead of finding a way my client can fit into an investment or product, I can find the right product to fit what my client is looking to accomplish with their goals and objectives.
Speaker 1:So, with that being said, are you charging fee for service or no?
Speaker 2:Sometimes it's commission and it's product-based and sometimes it is fee-based. I would say 80% of the new business that comes in the door has moved to the registered investment advisor model, so most of it is fee-based planning.
Speaker 1:Okay, and your firm also has an advisory program. How does that work?
Speaker 2:In terms of an advisory program. What do you mean?
Speaker 1:Manage money.
Speaker 2:Yeah, so we've got that's what I call RIA. Everybody has different terms for it. Yes, so we have a couple of different programs. We're able to custody money at Charles Schwab formerly TD Ameritrade Fidelity. We have a proprietary product that we use, matrix Trust Company, for a custodian as well as we. There's a small RAA that was founded off of a lot of the former TD Ameritrade people called Axos A-X-O-S Advisor Services, and so we have access to multiple different platforms that we can use.
Speaker 2:So, within the school districts themselves, sometimes I have to use a certain one just because of the way the 403B program is set up and the vendor slots are created within the active 403B participants, but for retirees I could pick any one of those programs. We charge a fee. We provide, as a certified financial planner, all types of financial services for that particular fee, and then, in terms of the funds and the investments, we actually have a committee that gets together every quarter and we talk about what we like and what we don't like and make decisions based on that. And my best analogy is it's kind of like coaches getting together after every football game and talking about their team and their players and how they did. Some have good games. Some don't have good games. I'll forgive a bad game, but if you get three or more bad games in a row, then I'm going to start looking at making some adjustments to the lineup and to who I'm starting.
Speaker 2:And that's the overall analogy, for what we do is once we have three consecutive quarters of you underperforming your peer group, then we deem that as something has changed there fundamentally. Where we need to make an adjustment to the fund within the portfolio, we'll try to maintain the same risk levels inside of the accounts. So it's a combination of a group effort as well as individual efforts, because there may be things that the group decides that maybe I don't agree with, or vice versa, and we all want to believe what we're doing for our clients is in the best interest. So, while our company gives us a lot of guidance and a lot of options, they also give us the flexibility to deviate from those if we think it's necessary for that particular individual or household.
Speaker 1:Interesting. Your agency, I believe, also has an auto-enrollment program. We do, I guess, for a 3B 457. How does that work?
Speaker 2:You know we're actually uniquely positioned to be able to do this, because the whole I guess you're looking for more like the mechanics of auto-enrollment is, what happens is if a school decides to put that in, everybody that signs up for their 403B signs up for their 403B. So if I have a new school district that just put in auto-enrollment, I could go in there give a presentation. If people do the paperwork with me, they're done. The auto-enrollment is really meant to catch the people that either had apathy or lazy or busy schedules that just never did it but should have. Nothing bugs me more than when I get a call from somebody that, hey, I've been at the school district for 10 years and I've never signed up for my 403B and my district offers a match. So on top of that, I left all the matching dollars on the table too, and that's like a personal pet peeve of ours, and auto-enrollment should fix that. At least by the time they reach out to me they will have been automatically signed up for their 403B. But what happens is the payroll person then, at the end of the first month, runs two lists they run a list of all employees and they run a list of employees that signed up for their 403Bs.
Speaker 2:Those that did not sign up for their 403Bs then get separated and then that list gets sent to whoever the qualified default vendor is in their contract. So they're going to have to pick a company that, if nobody signs up, this is the one everybody goes with. So that company has to be able to open accounts. Without a full slate of financial planning information, we're not going to have beneficiaries. We're not going to have a real, true risk tolerance on the person. I won't have asked them questions that I do as a financial planner, such as their debt and their family and their goals and objectives. They're just getting an account open. So we have name, address, phone number, date of birth, social security and that's about it.
Speaker 1:So is that money going into a fixed account or a security?
Speaker 2:Nope. So once we get that basic information, we can open an account. But most companies call those accounts starter accounts because we don't have the full gamut of info and then the only thing that's used is their birth date. So we look at their birth date and, based on their birth date, that will assign them to a target date fund. So the default investment inside of our program will almost always be a target date fund for the people that are automatically enrolled into the 403B through their district and then, once they get auto-enrolled and the money starts going in, the individuals have 90 days to be able to opt out and get their money back. So the other unique thing that companies need to be able to offer to do this is they have to be able to get that money back out of those 403B accounts and send it back to payroll to be included in the employee's paycheck as well as on their W-2.
Speaker 1:So what would happen if, in between that period of time, the market went down and there was a loss?
Speaker 2:Then they would get their money back. That was left is my understanding of that. You know, to date I don't know that we've had anybody opt out where we've had to send money back, or it's been so few and far between that. I don't think we've ever had any issues like that. But that is a really good question and something that would probably be better asked to the people that actually run the program, as opposed to the people that market the program.
Speaker 1:Yeah, and it's my understanding that most of the states now while they're trying to get to auto enrollment there's legal hurdles that are still there. I know I'm from Pennsylvania and there are state restrictions still, to the best of my knowledge, that the auto enrollment won't work. But I assume in Minnesota those issues have been dealt with. We have the same issues you do. Those issues have been dealt with.
Speaker 2:We have the same issues you do. Our Minnesota state statute 356.24 that governs 403Bs and matching dollars is amazing. We wouldn't have matches in Minnesota if it weren't for that. But it was written back in the 80s. So there's some archaic pieces to this law, such as we need a written form on file to be able to withhold money from somebody's paycheck, so that in and of itself would technically make auto-enrollment illegal. The way we've worked our way around that is, if the union bargains it and it's language inside of the contract, technically everybody that's a part of the union group in that employer now has given written permission to be able to do this once they signed off on the contract as a collective bargaining unit. So our way around it is actually to get the language into the working agreement of the teachers through collective bargaining.
Speaker 1:You know it's coming back to me. As I said, I've known your father, kent, for a long period of time and I remember for many years he was working with the union to get it in the uh, the individual contracts and everything, and uh, um, you know, it seems like he's succeeded in doing that. Yep, we've been matches along the way. What kind of matches do you have?
Speaker 2:so the history of the match in minnesota actually has to do with the contract language. They had sick leave buyouts, so when I'd go to leave work, they called it severance. If the teachers would go to leave their employer, they'd get paid for a certain number of sick days. So, hypothetically, if they got paid for 100 sick days and their average daily rate of pay was $250 a day, they'd get a $25,000 check when they leave employment. But when the union was looking at this, this was kind of a phantom value in there, because what if I burned up my sick days? What if, like and my mom's a great example my mom burned up most of her sick days and it wasn't for her, it was for her mom. She had to cash them in so that she could take care of her mom when her mom started aging and started having some medical issues and this happens to a lot of teachers. So then they wouldn't get anything.
Speaker 2:So the idea behind the match was how can we get this money into our employees' hands today, instead of allowing them to wait 20, 30, 40 years? And, yes, they will have to match it. They're going to have to put in their money to get it, but it's going to do two things. In Minnesota. You're immediately vested in your 403B, so once that money goes in there, there's nothing the district can ever do to get it back out. Number two it actually helps the school districts because do they budget for 10 people retiring or two people retiring? And when you're talking about larger districts up in the metropolitan areas that have maybe thousands of employees, the difference between 10 people retiring and a hundred people retiring, when you're paying them 30 to 50 grand a year, is really difficult to account for. So it gave the payroll offices levelized budgeting, which made it easier on their side of things.
Speaker 2:And then the union had a lot of advocates that said, yes, if we can grow this money instead of you just leaving it in the school's coffers, if you get it into yours and can earn six to 9% interest on market growth, imagine how much extra money you'll end up with at the end.
Speaker 2:So we kind of were in a great position where we had people on all sides seeing why this was a positive benefit and why this should become language within the contract. So that's where the matches initially came from in Minnesota. So we spent a good 20 years just getting matches into contracts and now we're on to the next steps. The next two steps are for one auto enrollment would be a big one, and the third step that we'd like to pursue, once we can figure out all the mechanics of that, is the student loan match and having student loan payments also be counted as qualified contributions. So it would entitle me to get matching dollars out of the district, and that would be probably the next evolution in 403Bs if we want to try to stay ahead of the curve within our state.
Speaker 1:Yeah, I think, from what I know, you're probably further ahead than most of the other states, than most of the other states and by being able to work through the union and the union contracts to get that done, that's absolutely terrific. Do you still wind up going into schools and do enrollments or do meetings and stuff?
Speaker 2:Yes, you know, now that I've expanded my team, I don't do as much as I used to, but I definitely still do. I mean, you know, before we started today I said I went to a school to pick up paperwork and talk to their new secretary and two other new teachers there that wanted to bend my ear while I was in the office and get a business card and try to get on my schedule. So I mean I definitely do. I try to. Just because of the sheer number of clients that I have to service, I usually try to have some of my team members do some of the earlier career people so that I can keep my time focused on what's the most important from a business building standpoint. But yeah, I like to work with people all through their career. It's hard to give up some of those old things that you've done for the last 20 years of your life.
Speaker 1:Especially when you're successful at doing them.
Speaker 2:Right, and while some of it's protecting your reputation within the employer itself, you know, still I don't want people to think that I'm just passing everybody off, you know? I mean whether I'm responsible for their account or not. Five years from now, I still want to be the key relationship within that group.
Speaker 1:Right, you mentioned C4L. I've interviewed a couple other financial advisors just recently and they talked about C4L. What went into your decision-making process to use them? How does it work and has it been beneficial for you? I know it can be rather expensive.
Speaker 2:Yes I would say, but I'm not on their like gold package. I'm not doing everything that they could possibly do, but it's using Salesforce, which is what we use, but they have a better system of it's built out. Salesforce is like a software code. You can kind of customize it however you need to, and there's just customized a little bit more for the annual review system. And what I was running into was really a kind of a process of labor that my receptionist was amazing at being a receptionist and she is but to be a receptionist and do paperwork and communicate with clients and try to keep track of when reviews were due, and everything just started to weigh on all of us and it created some animosity within the office because kind of people start finger pointing and things when things aren't done. So I was looking for a solution and it was offered to me and when I was at the NTSA conference, me and another advisor decided to try it out and really what they do is something similar where they're using Salesforce, but when the clients respond that they're interested in meeting, they have appointment schedulers that actually call and make X number of phone calls to the people to try to get them onto your calendar. So what they're doing, I would say more than anything, is scheduling for me and making sure that I'm meeting with the people when their one year annual review comes due or, at the very least, making my attempts that I need to make to contact them and to and to review their account.
Speaker 2:So, um, the system on the front end was pretty data heavy. I had to yank all the data out of my system. I had to clean it up, which anybody that stared at an Excel spreadsheet for more than an hour knows. It's not the easiest thing in the world to do, and it took us a few days to get through all of this. And then we had to get it over to them and obviously then they had to map it into their system, so everything went to the right place and then come back, and so we had to do several back and forths to make sure to get that in the system and as clean and accurate as possible. And then they do a launch campaign where they just blast out emails to everybody and say, hey, we got a new team, you might get some calls from these guys, expect some different voices to be communicating with you, and then, once we get through all of that, then they actually custom built the campaign for us because it was specific to what our compliance was asking for.
Speaker 2:And you mentioned their cost, and some of the cost is based on the number of phone calls that they make on a monthly basis.
Speaker 2:So if I wanted them to call 1400 people three times a piece, that ratcheted up my expenses considerably. So I worked with them and they were very good at working with me and looking for what we needed and trying to see if they could solve that when, instead of calling three times, our initial contact is an email which gives clients the option to opt out I don't want to meet this year which then reduces three phone calls per opt out. That selects that. So then that was able to fit me kind of within the parameters based on the number of dials I was paying for through their subscription system and what needed to be done to conduct the annual reviews with the clients. So it's really it's its own CRM With Client for Life. I feel like there's three things I'm paying for I'm paying for their CRM, I'm paying for the people to phone call and make the appointments and I'm paying for the once a week meeting where we decide what we're going to do for the next week.
Speaker 1:And you find you're getting enough business out of it obviously otherwise you wouldn't be doing it versus hiring somebody yourself and just getting it done.
Speaker 2:For me it was more defense than offense.
Speaker 2:So if I was not conducting my annual reviews, the clients were going to be reassigned, because how can anybody get paid on somebody that we haven't done any work on that particular person?
Speaker 2:And I was having trouble just communicating and contacting everybody in between appointments and meetings and doing what I should be doing my high-value activities and doing what I should be doing my high value activities. So, yes, that was kind of what it solved, for I guess more than anything was the time commitments that it was going to take. Have I gotten new business out of it? Absolutely? I mean, for better or for worse. It woke up a lot of sleepy clients, so it created a lot of work for a while, but at the end of the day it definitely created more business because it got people in the door that otherwise probably would have fallen off my radar because I wouldn't have continued to be persistent with them gotten so much business as a result of it that they want to limit some of the contacts and everything because they just don't have the time to follow up on all the things that are there.
Speaker 1:So that's a nice problem to have.
Speaker 2:If you have an old practice or you bought an old practice that has had zero modernization done, it's just, everybody knew Jeff Anderson and Jeff just kind of flew by the seat of his pants and did all his own paperwork it will force you to modernize it and they'll give you a good system to modernize it. If you're already modernized, it might not be quite as valuable to you know a newer practice, but I could definitely see that being a huge, especially if you bought like a dinosaur practice or something. That would be a huge thing to get everybody in and to get everybody woke up and meeting with you and doing what they should be doing.
Speaker 1:Yeah, let's go back. You're the CFP that you you were. When did you earn that and what impact did it have on your practice? You know, maybe a year or two years, three years later?
Speaker 2:So, honestly, it was kind of a clunky process. I signed up for it, got through all the modules and there's five different modules to pass and then, through the process, I also got married this was all kind of through that phase of my life and then went to sign up for the test, and the test dates that were available to me were like plus or minus a month of when my wife was due with our first child, and I just had this vision of me going to the test and getting a call and having to leave and start the whole thing over again. So I decided to. I just didn't sign up for the test at that time. Well then, I had a kid and didn't realize how busy you are and how much it changes your life, cause, no matter what people tell you, until you experience it you don't really understand it. So I actually had about a four or five year hiatus where I I I just kind of dropped the ball on it and didn't complete it. So then I um, I decided I better do it now versus never, and I had just brought a new advisor into my practice. He'd been with us for a year and he said he would do it too. So then we were able to kind of go through it together and I had a study buddy and so I took the test on Friday and passed. He took the test on Monday and passed. That coming Friday COVID hit and every test center was shut down throughout the nation. So either of us would not have passed on a first attempt. It would have been a year at least until the test centers would have opened and we would have been able to retake or even attempt to retake the test. So my story to get it was kind of funny.
Speaker 2:But how it changes is it changes your whole attitude as a financial planner. You now have working knowledge of all the different components of financial planning. They give you a structure and a path and it teaches you more of an academic way to do things as opposed to. You know, the history of our industry was more insurance and salesmen as opposed to consultants and financial advisors, and it really kind of tries to dispel the myth of a financial advisor is just a financial salesman. They're here to help you.
Speaker 2:You know answer all these different questions in your life and so you just speak so much more intelligently to clients when you can talk to them about estate plans, their insurance, their you know even their their debt levels to a level that you weren't able to, and some of it is even just the language that you learn the different terminologies. What is an executor? How does a trust work? Right, some of those little things that we've all heard of, but we don't have much of a working knowledge. So it is amazing when you go through it and when you come out of it. It changes all your conversations with your clients and it changes your ability to guide them down the best path possible as well. It gives you so many more tools in your toolbox in terms of the knowledge that you have to be the best advisor you can in terms of the knowledge that you have to be the best advisor you can.
Speaker 1:Yeah, you know something that you said earlier that you have, or will have, about four advisors working for you. It almost seems like it's an agency within an agency or an office within an agency is. I know within, like Cades Margolis, all of our individual advisors are individual subcontractors, et cetera, and while a couple of people might have some advisors that they work with, it's not really any of the advisors are underneath another advisor. I'm curious how does that work for you and the agency?
Speaker 2:We actually have two different models. Model one is very similar to what you're used to and that's kind of how my office is set up. Even though I have a team and I brought a lot of people on, the reality is we're all pretty siloed in terms of our practices and in terms of who we have. But it's nice to be able to share resources, like if I get sick and have a big presentation to do, to be able to have somebody else step in and fill in and help me out with that. But we also have another model that's been developed by some of our other advisors.
Speaker 2:That is kind of what you describe more like an agency within an agency, but we call them regional offices, and within those regional offices you're going to have kind of whoever started that practice that's in charge, and typically in that situation they don't want to work in the schools anymore. They've gotten the practice so big that they're working with all the people that retire from Toro or something along those lines, and so their practice has grown beyond the education marketplace. So then they would, in that situation, be able to maintain their assigned territory, but then they would have other advisors that would work in those respective districts that are assigned to them and they wouldn't necessarily be in the districts but they have the relationships. So they would be responsible, kind of almost as a manager of sorts, of making sure that those guys had their introductions, that their appointment schedules were full, and so there's some responsibility on that side of things. If you want to take part in the regional office structure, but then you can offer salaries to people for periods of time and we partner with the advisors where EFS will pay for a portion and the advisors will pay for a portion, and we have a math formula we do that with to try to keep it as fair as possible, based on AUM and profitability and size of the practice.
Speaker 2:So that's kind of the newest, latest, greatest thing that we've come out with, because we've had a lot of advisors asking for that, because we do have a lot of veteran advisors that are looking for some sort of a succession plan and just to hand stuff over is a scary proposition, because you don't know or trust at this point that they're going to do what you're going to do and at the end of the day nobody will do what you will do, because you're the one that put your blood, sweat and tears into it and you view it differently from somebody else.
Speaker 2:So so we have both of those models that exist out there, and so the the the latter that I talked about is relatively new. Had I had we had this a while ago, I may have exercised that and had some other people under me, but I knew, once I got over a thousand clients, that the business just gets difficult from that point forward from a servicing standpoint, and so I knew that if I wanted to continue to see growth in my area and not just stagnate, I had to bring somebody else on. So I volunteered to literally give up some of my school districts, some of my clients and some of my marketing responsibility so that I had more time for myself and my family and my hobbies.
Speaker 1:Sure, this might not be a fair question and if it's not, feel free not to answer it. Your agency has been around, efs Advisors has been around for a good period of time and your father certainly getting a little bit older these days. Is there a succession plan that's in place? Obviously, there's a lot of advisors that rely on the success of the agency and clients and the union, et cetera. Is it fair to talk about what some of the plans might be?
Speaker 2:Yeah, we can talk a little bit about it. So Kent has been hiring a company. They were actually at one of the conferences FP Transitions and all they do is help people transition practices, and so we've and, without going into too many details, the company was kind of it was reorganized into more of a corporation so that if people want to purchase shares of stock within EFS they're able to do so. Months will have an opportunity to buy some portion of EFS if they choose to do so, and then whatever profits are left at the end of the year will get kicked back to those advisors based on their respective percentages as a corporate distribution for people. So that is the current plan. In terms of exactly what percent and who will own what. I do not believe that has been ironed out yet.
Speaker 1:And I'm not asking for that, I'm talking about in generalities. So essentially it's an ESOP, an employee stock ownership plan or not, not exactly.
Speaker 2:I know they looked into the ESOP, but this is a they call it a class F reorganization where you actually create shares of stock and people can actually buy, create shares of stock and people can actually buy these shares of stock. And it's not the same thing really. It's similar. That's what I said when they explained it to me. I said it sounds like an ESOP and they're like, well, it's not. It kind of is, but it's not. It's different because it's not a benefit, your actual ownership in it is. So the way it worked was a little bit different and also the distribution of the shares at the end are a little bit different too. If you want to cash in your shares, this would be. It's actually structured a little bit more similar to a law firm where you have partners that can buy in and then they get to a certain point and then their shares are redeemed and then that's basically their retirement benefit.
Speaker 1:And then with a law firm. If you want to recruit a hotshot lawyer, he has the option to be able to buy in after some period of time.
Speaker 2:Exactly so. We'll have it. So even employees that are not necessarily advisors, people that have ran the office or been integral parts to the back office pieces of the company, they're going to be given a similar opportunity. All full time people, yeah the company.
Speaker 1:They're going to be given a similar opportunity. All full-time people? Yeah Well, hopefully at some point down the road I'll be able to have this conversation with Ken Chudi and maybe he'll be able to share some information. Many of us in the industry have either gone through this process not necessarily the exact same process here, but dealing with the succession planning and it's always interesting to hear how different people are dealing with it in different manners.
Speaker 2:Yeah, we've looked at a few different options. What's the big? What can I think of their name right now that bought up all the companies for all those years, that American retirement partners or U S retirement partners.
Speaker 2:You know with them we've met with a few different people. You know they've been given offers to buy it. I don't know that Kent really wants to just sell and walk away. I don't think that's his style. I think you know, selling the farm, you know he's a farmer by you know through and through down to his bones just sell the farm and walk away will never feel right to him, no matter what happens. I mean he'd be fine letting other people farm it slowly and slowly giving it up over time, but it's not something that he could just cut the cord on. So I think this would be a better option. He turned 65 this year, so this is kind of when he wants to start moving forward in this direction.
Speaker 2:And we've been meeting with some of our top advisors, some people that we know it would be nice to retain or make a longer term part of the company, and trying to give them the opportunity first. But if they refuse, they refuse. I mean we can't force anybody to do anything, but we are giving people the option and I think it's going to be a good option for a lot of people, because everybody in financial services. It's hard at first, but once you've been in it for long enough. It's a great business and it can be very lucrative, and so owning a piece of the bigger picture, I think, would be just as lucrative as just trying to work on it yourself.
Speaker 1:Absolutely, and certainly this is a very creative option to be able to deal with and hopefully there are a good many advisors hopefully mid-level advisors that really have interest in doing it and then taking it to the next level and growing the, the, the agency.
Speaker 2:Yeah, we hope so. That's the hope.
Speaker 1:Yeah, I did want to congratulate you on on becoming an elite advisor. Well, thank you, uh, that's. That's wonderful Uh in uh 2024. So I guess that's going to be awarded to you, uh at the conference Is that correct.
Speaker 1:Yeah, congratulations, and I was in the first group of lead advisors in 2014, I believe it was and I remember when Kent Schuette became an elite advisor. You know, it's a wonderful thing to be proud of and it says a lot about you and how you deal with your clients and your work ethic and your ability to be able to produce. Congratulations on that.
Speaker 2:Thank you very much.
Speaker 1:Other than the Elite Advisor Award in the past year or two? What are you most proud of as an accomplishment within your practice?
Speaker 2:That's a good question, you know, and over the last few years we made a lot of changes. We brought on new people. You know, through COVID we redid our whole office. So a Zoom experience is very similar to the client experience in the office where I've got technology and TVs on the walls. What I'm seeing they're seeing my practice reorganized and getting things more efficient and getting better systems in place to be consistent with what I'm doing and the amount of communications that I'm making for my office.
Speaker 2:Each year we try to do kind of one big thing for the office or for the practice.
Speaker 2:During COVID was rewiring the whole office for the distancing and you know kind of all that. And and then this last year was trying to get everything reorganized from kind of the COVID mess that happened through everything too, and so now that we've got all that in place, we actually have a meeting with my team at six o'clock Monday morning. It's a couple of more teachers, so the only time they can meet is before school and and we're going to kind of discuss what our big things are that we're going to try to change for 2024. But I think that's a. I think people bite off too much. I think if you can do one big thing a year and maybe four little things a year for the office, that's probably about as much as you can do, and I've read a lot about that. On setting goals that are not that we don't want big goals, but they need to be attainable and they need to be realistic, because then it keeps you motivated to continue to achieve them.
Speaker 1:Absolutely Okay. How about, on the flip note of that, what mistake in your career taught you the biggest lesson?
Speaker 2:Hmm, you know, it's hard to say. If there's one really big mistake, I feel like in this business, it's a whole bunch of little ones. I shouldn't have said this to this person or that to that person-explaining things and spending too much time trying to make sure people understand things instead of listening to them and hearing what they're looking for and trying to approach it from that standpoint. And I'd say most of us as advisors we feel smart and we want to share our knowledge and it comes out almost like diarrhea from the mouth a little bit, and being able to hold yourself back and listen, I think is the biggest thing that we all need to learn and that would probably make the biggest difference for advisors.
Speaker 2:But I mean, we could sit here all day and I could tell you all the little mistakes I've made, because I've got a bunch of them, but luckily for me, I've never had anything big enough that really created like an aha moment. I guess that I should never, ever do this again. So I have been lucky from that standpoint. But I've tripped a lot. I run all the time and when you're running you fall a lot and nothing you can do. You just get back up and keep going.
Speaker 1:You dust yourself off and you keep going.
Speaker 2:Yep.
Speaker 1:Exactly right. How do you spend your time outside of work? Do you volunteer for anything, organizations or anything?
Speaker 2:Yeah, yes and no. Actually I'm kind of involved in a lot of little stuff. I have a ton of little hobbies like I play hockey in the winter once a week with an adult, geezers and breezers kind of a beer league thing that's right in minnesota.
Speaker 2:There's nothing else to do during the winter, then right I have no number you can, so I spend september, october, november. I spend good chunks of that in the woods hunting. Yeah, I enjoy doing that. It's nice to get away from computer screen and stare at squirrels and birds instead of at numbers moving on a page. You know I used to do a lot of ice fishing Since I moved to Rochester. There's actually very few lakes. The southern half of Minnesota, once you get south of the cities, it's more like the Iowa layout. Down here All of the Minnesota that people see on pictures is typically north of the Minneapolis-St Paul area, where the lakes and the pine trees and all that stuff exists. So I used to.
Speaker 1:But it's all into 10,000 lakes.
Speaker 2:Well, there's closer to 30,000. But yeah, but some of them are out, yeah. So I actually haven't done much ice fishing recently. So that was part of why I took up hunting. When I moved to Southern Minnesota there was nowhere to fish unless I drove an hour to Winona, to the river over on the Mississippi and river fishing. You kind of got to know where you're going and what you're doing. So I talked to some friends down here and they had some land and said why don't you try hunting? So I've been deer hunting for the last, you know half a dozen well, probably 10 years or so. So that's one of the things I do.
Speaker 2:During COVID, when I was in high school, I got my pilot's license. I thought out of high school I wanted to go to college and be a pilot. But commercial piloting is more like driving a bus. You know you, once you take off, you just kind of sit there for hours until you got to land it, and that's not really my style. So I went back and got recertified during COVID and not only got myself able to fly, I went to the next level of certification to get instrument rated.
Speaker 2:So I actually spend time with aviation as a hobby too. Whether I'm flying or not, I'm looking at the sky or looking at the maps or the weather or things like that pretty regularly. So I've got quite a few hobbies, but most of what I and volunteer work a lot of it is with my kids. You know I, because of our our flexibility in our schedules and me having to work a lot of early mornings and late afternoons, I don't feel bad taking off time to be a chaperone for my kids' field trips or a coach for their little basketball league. Whether I know anything about basketball or not, I'm teaching. I can teach them to dribble and teach them to pass and play as a team.
Speaker 2:Most of my volunteer work has been done through more of the youth stuff, with the exception of classroom presentations.
Speaker 2:I have a number of business teachers at my schools that need guest speakers and they'll bring me in to talk about anything from insurance to retirement to just my career and what careers might be available in financial services. So I actually spend a fair amount of time, usually in the late spring, presenting to students in classrooms in the agricultural department or whatever it is that I'm doing the work readiness classes. So I tend to give back in those ways, mostly in terms of you know, I think the most valuable thing anybody can give isn't money, it's time, and so if I'm spending time with the school systems one way shape or form, to me it's kind of a win-win, because not only am I volunteering and giving back and I like doing that but I'm also involved with the people that may or may not be my clients, so I'm able to volunteer and market all at the same time, if that's even a thing, and so that's where I try to spend most of my volunteer time is within the education system.
Speaker 1:Terrific, terrific. Let me ask you one more thing related to working with family, thing related to working with family. You know you said you wanted to go to Rochester to kind of not be directly underneath your father, I assume. How is it working with family and the dynamics? And you know you don't always see eye to eye on certain things and you know how does it work for you guys.
Speaker 2:You know, I guess that's a tough question for me to answer because I've always done this Like this is kind of my normal more than anything. But I think with anything, with any boss, no matter who they are, you learn how to work with them. You learn the ways that and the things that are going to upset them and the things that get them excited, and you kind of know how to communicate in those right times at the using the right words. In terms of working with my dad, he's not really doing the same thing I'm doing. We're not in the same office together. We're not marketing the people at this point, so he's more on the upper end of things.
Speaker 2:I think the biggest hurdle I have is people sometimes see me and him as kind of one in the same, like if he knows stuff, I should know it, or if I know it, he should know it. So I get a lot of questions from other advisors when he's maybe out of the office that I don't have the answers to because I'm not with him every day and in all the discussions. So I think sometimes people assume that I have a better beat on what's going on than what I do just because of my relationship with them and the fact that we go on trips and we travel together. I mean, we're family, right, we see each other on weekends, when you know 4th of July and things like that but when we're together, we definitely talk about work, but it's it's far from a primary focus, because neither my wife, my mom or my kids want us to sit on our own in the corner and talk about work while they're doing whatever it is that they're doing, right, so, uh, but, but I don't think it's it's too bad.
Speaker 2:It's just a matter of navigating the waters and and learning what is people's hot buttons and it's also, you know, staying level-headed and um and trying to pull the emotions out of the mix. And I think that's what happens with family members. When it's a boss, it's a boss. When it's your dad, it has a different emotional connection if they tell you not to do something and or force you to do something, maybe that you didn't want to do. And so being able to separate that, to be honest, when we're at work, I call him Kent, when we're at home, I call him dad, and in my mind, that helps me keep that separated between the at work and the personal side of things. So I actually kind of trained my brain a little bit to look at things differently when we're in different environments.
Speaker 1:Yeah, it's interesting you say that because I work with my daughter. She's been working with me about seven years and you know it's wonderful to be able to do that. But I see she does the same thing with me. When it's work, it's Randy, when it's everything else, it's dad.
Speaker 2:And there's a level of professionalism too. I don't want to be like dad when I'm in a boardroom with a bunch of advisors, versus calling them by the same name that everybody else does. I think it tries to level that playing field little bit too, in terms of the respect I have and the position I have within the room.
Speaker 1:So well, I know Kent is so proud of what you have accomplished and you know it's truly been my honor to be able to uh interview you today and to see where you've come from. I guess I've known you for probably the 18 years that you've been working with your yeah, probably. I originally met him in 1990 when I joined NASA. It goes back a ways, so it's very nice to be able to see that, and congratulations on the Lead Advisor Award.
Speaker 2:Thank, you, thank you very much.
Speaker 1:I won't be able to make the conference this year, but I will be there in spirit and cheering you on Any last words.
Speaker 2:I don't think so. I mean I guess. So one story here. I can tell you a story if you want something like that. It was kind of a profound moment for me, I guess you could say when I was.
Speaker 2:You know, we spend all this time talking to our clients about their goals and dreams and objectives and all these things they can do in retirement, how to spend their money. And I had this lady and her husband come in and he was a teacher, well-respected, but did the arts and nature program, and she was a part-time nurse and they had four daughters and their kids never went without but they never had any access either. And she ended up getting an inheritance and so she got this roughly four or $500,000 inheritance. And so I'm going through this. So what are your dreams, what are your goals, what are you going to do? And she looked at me all funny and she's like you know, tony, we've been living this way our whole life.
Speaker 2:What I'm looking for is, when I go to Chipotle I don't want to feel bad to add the guacamole, and it was really.
Speaker 2:I mean, it's funny, but it was a profound moment for me where I kind of changed the way I was talking to clients and this is a common story that I tell that I think that's what people are looking for. You know they don't need to go scuba diving in Belize or fly first class everywhere they go they're looking for. I don't feel bad to get my grandkid that gift when I'm in the store, or I don't feel bad to have an extra beverage or get the extra sour cream or guacamole on my taco, and so I've kind of changed the way I have talked to people from that standpoint, off of that simple little story and it's a joke, you know, we call it the add the guacamole story in my office. But I mean, I think it was a good point for me to realize that I don't have to change the world for these people. I just have to get them a similar lifestyle when they cross the threshold and enter retirement.
Speaker 1:Right. Wonderful story. And again thank you on behalf of ARA and NATSA. We certainly appreciate you participating in this WOWcast.
Speaker 2:Well, thank you too, and thank you, randy, thanks for everything you've done for all these organizations over these years. I've known you and your name is kind of front and center at every one of the meetings I've been to. So if nothing else, that tells you kind of your celebrity stature within the organization.
Speaker 1:This is Randy Aranowitz and Joey Santos-Jones signing off, and we look forward to interviewing our next member on the WoWcast 2.0. Thank you for listening and we hope that you've learned from this WoWcast series. Your members are able to download the WoWcast by going to wwwntsa-netorg. Slash WoWcast W-O-W-C-A-S-T and you'll be able to download all the past episodes as well as the new ones. Thank you.