Publications

- April 1, 2018: Vol. 5, Number 4

Brand builder: When the RIA merger-mania smoke clears, Wealth Enhancement Group CEO Jeff Dekko aims to ensure his firm is one of the big winners

by Mike Consol

Jeff Dekko’s favorite breakfast cereal is Wheaties, which would be an inconsequential piece of information except that he is a former executive at General Mills, the breakfast cereal giant. More to the point, Dekko was brand manager for Wheaties and Cheerios — but Wheaties was his favorite. Oddly, it is a cereal he never eats, as is the case with most other Americans who buy Wheaties.

“The thing about Wheaties is it really was the cereal that people would buy but not always eat,” Dekko says. “Wheaties always had the lowest rate of consumption-to-sales.”

It is not hard to decode why that is the case. Consumers often buy Wheaties as collector’s items because of the famous athletes whose visages grace the boxes.

The legend of Wheaties, one of many lessons from his his days at General Mills, taught Dekko the power of branding and celebrity identification.

WINNING CEREAL NUMBER

Today, Dekko is CEO of Wealth Enhancement Group, and one of the few chief executives at an RIA who did not earn his chops in the private wealth advisory business. The manner in which he was offered the job was also pretty rare. He was part of a private equity group investing into the firm to drive faster growth.

“In the middle of that process, I was on a plane with a guy that was running the company, and we were down to final negotiation on the purchase agreement and about two weeks out from the close,” Dekko recalls. “The CEO of the company and I were on a plane, and he looked over at me and said, ‘I don’t want to run the company anymore. I think you should run it.’”

Dekko appreciated the confidence, and he knew the partners who were buying the firm. He suggested lunch to discuss the job offer that had been tendered at an altitude of 30,000 feet. Over lunch Dekko agreed to run the then-$600 million firm until the buyers could recruit a new CEO, figuring he was signing up for a six-month assignment. That was 15 years ago.

HISTORY LESSON

Dekko never fancied himself a cog in a major corporation — even in playing the role of an important cog. Rather, entrepreneurship was on his mind as early as his undergraduate years at Carleton College, a private liberal arts institution of higher learning founded in 1866 in Northfield, Minn., about 40 miles south of the Twin Cities of Minneapolis–St. Paul. At Carleton he was an economics major until he signed up for a couple of history courses. One in particular, Chaucer’s England, made him realize how much he was drawn to history.

“I just loved it,” he recollects. “I knew I was going to go into the business world and figured I didn’t need to start while in college, so I switched my major to history. I immersed myself in something that I was passionate about.”

Immersed in history, yes, but that did not stop Dekko from finding the time to run a couple of small businesses out of his dorm room, an early clue that playing a discreet role in a major corporation would not be his long-term professional calling. That realization would come later, though. Initially, Dekko was, of course, thrilled to be hired by a powerhouse like General Mills, and he was lucky enough to be assigned to a division that was struggling.

“It was an acquisition the company had made and the best part was the chaos,” he says. “When you have chaos there is nothing but opportunity for somebody who is new. Everyone is trying their best to make things work, so good ideas rise to the top.”

Nine months after his General Mills arrival, the company underwent a workforce reduction, particularly the marketing area. Some 13 of the 15 marketing people who had been hired were given their walking papers. Dekko was one of the fortunate two who was retained, and even promoted.

“It was an interesting day,” he says. “I was expecting to pack my boxes and go home, and instead they said, ‘No we’re actually going to keep you.’ There are days in your career that you remember for a long time, and that was definitely one of them.”

RULES OF ATTRACTION

Dekko was attracted to Wealth Enhancement Group’s business model — a marketing organization focused on educating people to attract them as clients, rather than selling them.

“It is really what I would call a true marketing-driven firm,” he says. “To give you a sense, the marketing group represents about 10 percent of our employees, and we are very active in pushing out content.”

The firm is active in publishing and presenting information through several mediums. It has published or produced:

  • Books
  • Hundreds of articles, many of them
    Internet-based
  • Interviews
  • White papers
  • Webinars
  • Weekly hour-long radio programs
  • Events

Each channel allows Wealth Enhancement Group to showcase the expertise of its personnel. In addition to dealing with subjects such as retirement, Social Security, taxes and the difference between a Roth and traditional IRA, the content produced makes clear that financial planning is for the masses, not the so-called 0.1 percent.

“Most people think financial planning is for people that have $50 million of assets,” Dekko says. “When I first got here that was very much the view of many people. The reality is financial planning is really for everybody — in fact, in some ways if you have less assets the level of precision becomes more intense; planning becomes that much more important.”

THE HONOR IS YOURS

One of the interestingly things Dekko learned as brand manager at General Mills is that for athletes appearing on the Wheaties’ box, it was considered the realization of a childhood dream. There was the time, however, when the agent of an NBA star was negotiating for “tons of money” for his client to appear on the cereal box.

“This was in the early 1990s when sports contracts and endorsements were going crazy,” Dekko says. “I just said, ‘Well, we don’t do that,’ and word traveled through the NBA back to the player that his agent was being difficult. I got a voicemail from the player saying he would be on the box for free. The Wheaties brand is one where athletes sat, as little boys and girls, saw their heroes on the box, and when they became stars they still carried that sentiment with them and still felt it was an honor to be on the box.”

WATERSHED MOMENT

Though, by his own account, Dekko was learning a “ton” in the General Mills marketing department, after six years with the cereal-maker, he made a “very thoughtful” decision to leave the company.

“I loved General Mills, I loved the people, but I needed a more entrepreneurial setting,” Dekko says.

His departure took him to Recovery Engineering, a company basically in the camping business, which might not sound all that exciting, though they did manufacture desalination units for the military, and also created a water filtration product called PUR for the consumer market that competed against Brita, GE, Purolator and others. It was PUR’s pitcher-based, faucet-based and plumbing-based filtration products that captured the attention of Proctor & Gamble, especially after its sales zoomed from $14 million to $105 million during Dekko’s tenure with the company, making it the market leader among water filtration systems for the home. P&G bought the product in 1999 at a 100 percent premium.

Cause for celebration, one would think.

“I told my staff we were being purchased by Procter & Gamble and they looked at me and said, ‘We are not going to have jobs. They are a great marketing organization, why would they keep us?’ I looked at them and said, ‘I think that is the wrong way to think about it; they are really interested in our company because of the way we marketed, and so our job is to continue to demonstrate all the things we’ve done until the purchase occurs.’”

That effort worked, as P&G offered jobs to 25 of the 26 people involved, and most of them took the deal and enjoyed lengthy careers with P&G. Dekko was not one of them. He had already left General Mills because he was not interested in Fortune 500 living, and P&G, for all its greatness, would have been much the same experience.

MEANWHILE, BACK AT ACADEMIA

Jeff Dekko landed at General Mills immediately after graduating from Carleton College in Minnesota, and the company proved great training for a man who would eventually be hired to run a wealth advisory firm, in part because it advanced his academic credentials.

Dekko enrolled in the MBA program at the University of Chicago, both because it was known as one of the nation’s top MBA programs, and it was one of the schools where General Mills liked to find recruits. The university offered classes at its downtown campus on evenings and Saturdays, allowing Dekko to schedule Saturday morning flights to attend two courses per semester. So it was fly to Chicago and attend classes by day, followed by an evening flight back to Minneapolis to crack the books.

“I was a young guy, probably 22 or 23 at the time, and had lots of time on my hands,” he says.

ORGANIC CHEMISTRY

When Wealth Enhancement Group launched in the Twin Cities (Plymouth, Minn., to be precise) it had a few offices and $600 million in AUM. Today, Wealth Enhancement Group has more than $8 billion in client advisory and brokerage assets, gained almost entirely through organic growth. That is not to say the firm does not engage in the acquisition process. Some growth has come through the acquisition of other RIAs, primarily as a way to enter new markets rather than acquiring new adviser talent.

The firm’s entrance into Chicago in 2014 with the acquisition of Summit Wealth Advisors, a $200 million RIA, is a good example. Since then, the Chicago office has grown, mostly organically, to almost fourfold or nearly $1 billion.

Other RIAs acquired by Wealth Enhancement Group include Darien, Conn.–based HHG & Co., Houston-based Sound Financial Solutions and Jacksonville, Fla.–based CPA Retirement Planning.

A bit less than $2 billion of Wealth Enhancement Group’s $8 billion in assets was the result of acquisitions. Currently, the firm is focused on expanding its footprint into several new markets, among them the “upper Midwest,” Texas and the New York area.

“The first thing we look for is alignment with what we do as a firm,” he says. “You can’t buy a firm and then change it, so we look for firms that have a commitment to financial planning and have capabilities to deliver on it,” Dekko remarks. “We look for characteristics around how they think about investment management. If they are market timers, we are going to have a big philosophical difference. We are looking for fit, but that doesn’t mean that we are looking for clones.”

A key partner in the acquisition and expansion drive is Lightyear Capital, a $3.5 billion New York City–based private equity firm that provides acquisition capital to financial service companies.

YES, TELL ME HOW

“Our partnership with Lightyear Capital continues to fuel our successful growth agenda across the country,” Dekko said in a written statement in 2016.

What is the objective of Dekko’s expansion strategy?

“I’m a brand guy,” he says. “We believe there is space for a significant brand in the financial planning area. You don’t really see one on a national level today, or even a really dominant one. I think there is a big, wide-open space for that to be established. That said, we believe that you need to have heft in a specific geography.”

REPEAT AFTER ME

The firm’s success with its acquisitions is predicated on its ability to institutionalize its processes in ways that are repeatable within the new offices it buys, according to Dekko.

One of the key processes that helped the firm excel is its Roundtable. It works like so: An adviser takes on a new client and creates a “case,” which is part of the planning process. The adviser meets with the Roundtable with the case in hand and the discussion and analysis begins with the firm’s team of specialists and advisers in six core areas: financial planning, retirement income planning, tax strategies, investment management, estate planning and insurance. The purpose is to give clients the benefit of a comprehensive review of their overall financial issues.

Interestingly, the team of specialists approach of diagnosing and solving the issues is similar to how the famed Mayo Clinic, only 90 minutes away, diagnoses and treats difficult medical issues, though the Roundtable concept did not come from the Mayo Clinic, says Dekko, but rather from David Hess, one of the firm’s co-founders who has since retired.

“Advisers participate, junior folks participate, and it is a total learning process for them, so that one day they will be able to contribute back,” Dekko says. “When you think about it, getting multiple people thinking in a client-centric way about problems, manifesting expertise for the client, it is an efficient way serving the clients and developing more talent as we grow.”

The Roundtable is one component of the firm’s signature UniFi process. That three-step UniFi program consists of:

  • Organize: Collect a clients’ financial information and consolidate it into that client’s “UniFi inventory”
  • Collaborate: Use the Roundtable team approach to help ensure client financial plans are covered from every angle
  • Guide: Clarify the options for putting the client’s plan into action, and providing support through each step

The objective is to ensure the client’s financial life is organized, comprehensive and understandable to the layman, enabling clients to make more confident decisions about their financial future, and to make the experience less stressful. An example of the program’s success, recalled by Dekko, was the time he was anonymously riding down the elevator with a husband and wife who were having a conversation about the meeting they had just completed with their adviser at Wealth Enhancement Group. “One spouse looked over to the other spouse and said, ‘You know, that is the first time I have understood our financial situation.’ That was telling to me,” Dekko says.

It was more evidence the firm was successfully taking esoteric financial issues and communicating them simply and understandably to clients. What the firm is trying to avoid is financial advisers telling their clients what they are going to do with the clients’ resources, a scenario Dekko calls a “weak relationship.” Rather, the firm focuses on empowering clients to the degree they are comfortable making collaborative decisions about their portfolio in conjunction with advisers.

“We want them to understand enough that they are not removed from the decision making,” he says.

WHAT’S YOUR STORY?

From the adviser’s standpoint, he or she wants to understand the client’s values, and at Wealth Enhancement Group that generally involves eliciting stories or experiences from clients.

“When people talk about their values they tend to be rooted in something significant in their life,” says Dekko. “Risk tolerance questionnaires are great, but a person’s risk tolerance tends to change a lot as conditions change. Instead, when you have a conversation with someone about their values, you are getting at the root of something that has been around for a long time, or made a major impression. You get a better sense of what’s right for the client.”

LAST (BIG) FIRMS STANDING

Dekko says the firm is prepared to be part of the consolidation that is sweeping the RIA landscape, as big and mid-sized players look to achieve scale, which is necessary to afford the resources required to stay current on technological advancements and the growing thicket of federal regulations.

“If you go back 30 years ago, scale didn’t really matter in the RIA space,” he says. “That has changed and there are two primary catalysts driving it. One is the regulatory environment in general, and I’m not just talking about FINRA and the SEC. There are also employment regulations that have increased the complexity of running a business. The other part is technology, which has changed in a way that, if you are a multibillion-dollar firm, you can take advantage of technology in a way that smaller firms cannot.”

A third factor is the development of a staff of financial professionals who ensure clients receive a “consistent value proposition.”

“If you fail to deliver a promise, you lose the client.”

Dekko’s 10-year outlook calls for Wealth Enhancement Group to become a $30 billion-plus wealth advisory, with a goal of being one of the 15 to 25 firms that lead — if not dominate — the industry.

“Look at the broker/dealer space,” he says. “Years ago, there were tons of broker/dealers. Now, it is dominated by 10. Other professional service industries, such as accounting, consolidated in that way. It never happens like lightning but, before you know it, suddenly the Big Eight has become the Big Four.”

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

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