Chris Behrens, CEO of The Mather Group, talked to RIA Intel about several initiatives, including its internship program, in which innovation plays a key role in identifying, servicing, and retaining clients. TMG, which has $9 billion in assets under management and a 98 percent retention rate, is leveraging its success in innovation into a plan to grow ten-fold over the next five years through a combination of organic growth and M&A.
RIA Intel: Tell me about The Mather Group’s approach to innovation.
Chris Behrens: From my perspective and the team’s perspective, we’re not only innovative, but also differentiating. That starts with our organic strategy. We intentionally separate Mather’s business development team, which is responsible for generating new client business, from the team that manages client assets or investments. It’s up to the business development person to determine at what stage of the sale process they want to bring in the wealth advisor to introduce them as the person that’s going to be managing assets on a go-forward basis.
You have an internship initiative as well. Describe how that works.
The process really starts with our paid internship program. This past year, we had 70 college interns based in Chicago and Houston. Each office had 35 individuals typically completing their sophomore or junior year. Their goal and objective, based on technology we use, is to identify like-minded individuals who are The Mather Group’s typical client, generally 61 years of age and with somewhere between $2.5 and $2.7 million in assets to invest with us. There’s a lot of geographic and psychographic work that happens to identify these people. As a result, we generated 100,000 leads this past summer.
What happens with those leads?
Those leads then get transitioned to our first-, second-, and third-year client associates. We view the internship program as a breeding ground or our internal farm system, which we use to hire not only wealth advisors but people in business development, tax estate planning, marketing, whatever their aspirations are within the wealth management space. We expect those client associates will generate more than 425 new clients and bring on about $1.2 billion in net new assets from that program.
But you do more for your clients than just invest those assets.
Right. We are a financial planning firm first that then provides asset wealth management and tax and estate planning. When I say “tax,” it’s not only tax strategy but tax prep as well. We complete about 70 percent of our client’s taxes on their behalf in addition to the estate planning. That’s all provided and quarterbacked by the relationship that the wealth advisor has with the client, and then we intentionally pair our wealth management team with our tax and estate planning team to service the client. We hit a lot of touch points and make that relationship very, very sticky, and that has resulted in a 98.2 percent retention rate. And that’s been consistent year over year.
Talk about the growth at TMG that has come from acquisitions.
Yes, we’ve also scaled and grown our M&A practice. Over the last three years, we have successfully acquired or partnered with around 20 different firms across the country. We have a two-pronged approach when it comes to acquisitions: the sub-$1 billion AUM marketplace and then the $2 billion to $20 billion marketplace as our other growth opportunity.
You’re innovating in technology as well. Talk about how that fits in with other priorities.
We continue to drive forward with technology. It’s our third largest expense within the firm, after our labor and real estate. It takes a significant investment to continue that. Our main CRM engine is SalesForce. Everything that we do connects through the SalesForce platform. We use Orion, MoneyGuide, MoneyGuide Pro, and eMoney for all our financial planning and client portals on the financial side. And then we consistently look for opportunities to streamline our process in how we work with our clients. We look for efficiencies in that process. How can we reduce five steps to one step, 10 steps to three steps? That’s the first thing we do.
The second thing that we do is look at software tools and applications to take steps out of the process. This has been very important to us. And then the third step is to hire, meaning we’ve grown at a significant rate. It’s not the first thing we do, but it’s the third thing we do to make sure that we continue to gain that efficiency and leverage technology and what it brings, which continues to change at such a significant pace that it really is an annual event for us.
You’ve said in interviews that you’d like The Mather Group to become a leading national boutique agency. What does that mean to you?
There’s a reason why clients have come to work with The Mather Group. When I started three years ago, we had 1,000 clients. Today, we have over 4,000 clients. Why is that? A lot of it, obviously, has to do with our service offering, but also our employees and what we’re doing as a firm to work on behalf of our clients. We effectively manage the wealth — their assets that they’ve created over their lifetime while they’re working, through retirement, and then at passing. And as part of that process, we want to maintain that feel that we have, in terms of the relationship with the client. Taking it a step further, at The Mather Group, on average, a TMG wealth advisor will manage somewhere between 120 and 130 clients, depending on complexity.
That’s an impressive ratio.
No more than that. We’ll never get to the stage where a wealth advisor is managing 500 or 600 clients. We want to maintain that touch, that feel, that relationship with the client, to meet their needs, to feel that we’re always available. And as we scale and grow, what we’ve done has been able to organically bring on new wealth advisors. But also, when we partner with somebody, one of the advantages that we bring to them is our tech stack, our capability. That allows that wealth advisor from a new partnership to now manage 120, 130 clients, whereas before, they were only managing half of that. And so, it gets them to grow, scale along with us, provide career opportunities that all go toward generating that growth and making a very, very compelling statement to differentiate us in the marketplace.
As CEO, you’ve been careful to emphasize that TMG is not managed by you as an individual. It takes a team of diverse leaders to make the business run efficiently.
Our impact initiatives are very important to the firm. If you look at several of my direct reports regarding gender diversity, I have several leaders of functional areas who are all women. Our chief operations officer, our chief human resources officer, our chief marketing officer, our family office head are all women. When you look in terms of the capability and skill sets that they bring to the business, it’s important that we continue to look like America.
How do you see TMG and the RIA space in general evolving?
It’s going to continue to grow. I think the fee-based model versus commission is much more preferable for our clients. I think our goal and objective is how do we continue to add a service offering that can be provided by the wealth advisor, that quarterback of the relationship, to continually enhance what we do as a firm to meet our clients’ needs. We want to further develop that one-stop-shop approach.
Where do you see all this going for TMG?
Our success will continue to be determined by our clients, the number that we’re able to partner with, the longevity, the retention from which we’re able to provide those services and continue to scale and grow as we innovate. What I will share with you is, internally, our goal and objective over the next five years is to become a $100 billion firm, driven by our organic and, obviously, our growth in M&A. But what’s driving that $100 billion goal is the number of people who we can provide services for. We think we have a very good model on which to do that. It’s our job to make ourselves available to all those who want to receive it.