Publications

- January 1, 2018: Vol. 5, Number 1

The hybrid investor: Jeff Rosenthal, CEO of Triad Advisors, argues that real power for wealth advisory firms comes from being a house undivided

by Mike Consol

When Jeff Rosenthal was named president and CEO of Triad Advisors on Jan. 1, 2016, company co-founder and outgoing CEO Mark Mettelman announced that it was an opportune time to pass the torch to a new generation of leaders as part of the next stage of Triad’s development. Mettelman, who simultaneously transitioned to the role of chairman, went on to say that Rosenthal embodied that leadership because he had earned the respect and trust of the organization’s affiliated advisers, has a passion for service, and possesses a deep understanding of the wealth advisory industry.

Since he joined Triad in 2002, Rosenthal worked across a range of senior leadership roles at the firm, including as executive vice president and chief marketing officer, during which he led the marketing, practice management and education, due diligence, and advisory services teams.

Today, the Atlanta-based firm is home to 650 affiliated financial advisers and $25 billion under management.

 

What was your most formative professional experience?

While working with John Schivy, my manager at The Hartford, he truly taught me how to listen to what the individual needs were of the adviser and what their client was trying to accomplish. It drove me to develop meaningful relationships with those advisers I worked for.
If you could go back in time, what would you tell a 25-year-old Jeff Rosenthal?

Understand and play to your strengths; and relationships are everything.

What is the biggest lesson you’ve learned?

Stand in front of issues, address them openly and honestly, and work faithfully to resolve those issues.

What is the best piece of career advice you ever received?

My dad was the director of career planning and placement for the University of Georgia when he retired, and I was in high school painting dorm rooms in the summer. He consistently reminded me that sometimes you just have to get up and “ring the bell.” In other words, go do the hard work that many others aren’t willing to do. I heard the same quote earlier this fall from a colleague and it has stood the test of time.

What phrase do you think is most overused in your industry?

Not necessarily an industry phrase but one that is overused by many people is “at the end of the day.” For this industry, I would lean to “the new normal” because it seems every week is bringing us the new normal.

If the most recent year were set to music, what would be the first cut on the soundtrack?

“Round and Round” by Ratt, and “You Spin Me Round” by Dead or Alive.

What is the most influential book you have read?

One that I just reread for the first time since my teenage years is Jonathan Livingston Seagull. I found its message to be as true today as it was when I was a freshman in high school.

What is your favorite quotation?

I love quotes, so to pick a favorite is difficult. One that is meaningful now is from Roy Rogers: “Even if you are on the right track, you’ll get run over if you just sit there.” Another that has stood the test of time for me is a quote by President Calvin Coolidge: “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and will always solve the problems of the human race.”

You’re organizing a dinner party. Which three people, dead or alive,
do you invite?

My dad (who passed away a couple of years ago), my grandpa (a great storyteller who built his family up from nothing), and either Robin Williams or Bill Murray because I am sure one of them would have other plans.

How did Triad Advisors come into being?

Triad was founded by two partners back in 1998 — Mark Mettelman and Bob Bruderman. Mark Mettelman is our chairman and was our president and CEO up until about 18 months ago when he elevated himself into the chairman’s position and I stepped in as president. Bob Bruderman is an adviser and chairman of Premier Trust, which is owned by our parent company, Ladenburg Thalmann. Mark and Bob and Triad were ahead of their time in recognizing the hybrid adviser model, which really wasn’t even a word or defined at that point, but they understood it was where the future of independent retail advice was headed. The hybrid adviser model intrinsically offers the greatest level of choice and flexibility for independent advisers.

What about your tenure with the company?

I hit my 15-year mark with Triad in October 2017. I really grew up in the firm under Mark Mettelman and his vision, along with a very tenured C-suite of executives. I came to Triad in a marketing capacity, focusing on adviser relationships, product relationships and due diligence. I moved from an entry-level position, for lack of a better term, to director of marketing to chief marketing officer to the president and CEO roles 18 months ago.

Describe your state of mind these days.

Optimistic and opportunistic, because of all the changes that our industry is going through. It is the biggest amount of transformation our executives and advisers have faced in their careers, and it’s providing a tremendous amount of opportunity that we can take advantage of. We are positioned well in this new-new-new normal. It’s a great time to be in the business and will prove that independent advisers who can provide choice across a platform are desperately needed as Americans move closer to retirement.

How do you define the advantages of the hybrid RIA model?

The benefit of the hybrid model is that it gives advisers the choice and flexibility required to meet the individualized needs of their investors on a go-forward basis. If you look at where we are regulatorily and, more importantly, where we are going to be, choice is key. There is not a one-size-fits-all situation. Whether we are dealing with advisers or whether our advisers are dealing with their clients, solutions have to be individualized, and to do that an open architecture is needed that allows advisers to meet the individual needs. The choice and independence the hybrid model provides is vitally important.

Functionally speaking, what is the relationship between Triad Advisors and parent company Ladenburg Thalmann?

Eleven years ago, Ladenburg Thalmann began the process of innovating the network model. Fast forward to today, and with five broker/dealers and multiple financial affiliates, including a trust company, insurance brokerage, asset management company, and fixed-income specialists, Ladenburg Thalmann has created an enterprise that values the independent and unique culture of its affiliates while looking for ways to drive efficiencies through scale. The relationship between Triad and Ladenburg Thalmann is symbiotic. We get the best of both worlds in terms of day-to-day operating autonomy combined with world-class resources through the platform they provide. A specific example of one of the benefits that we’ve been able to roll out is Ladenburg Thalmann’s investment research, which can guide our advisers through the different opportunities in any market. It’s one of the key benefits we garner from being a subsidiary. We are coming up on nine years since Ladenburg Thalmann acquired Triad and we’ve been incredibly pleased with the significant degree of autonomy from day one. It’s a structure that works extremely well, not only for us here in Atlanta but especially for advisers and the clients that they serve.

What is the story behind the Triad name? Triad implies three but you had two co-founders.

It does imply three, you’re exactly right, but it defines the relationships between the client, the adviser and the wealth management firm.

Where has the firm’s growth been coming from?

We have a large pool of advisers that have been growing due, in part, to a focus of female advisers. We are ranked number three in the industry by the percentage of female advisers in our organization. Nearly 30 percent of our advisers are female, compared with the industry average of 18 percent. Ladenburg Thalmann has an Institute of Women & Finance, as well as a mentorship program that allows female advisers to really work with each other to share ideas, to network and to build on each other’s success. That has been extremely beneficial.

The other point I’d make is that the average age of our affiliated advisers is actually getting younger. Depending on who you talk to, the average age of advisers is between 52 and 57; our average age at this point is 50 and, if you look at the average age of advisers that joined us in the last two years, it has been 46. We have what could really be called a long-tenured Gen X management team. Our head of strategy has been here 18 years, I’ve been here 15, our head of operations was here when the door opened.

Describe the firm’s culture.

We are a service and relationship-based culture. We are nothing more than a service organization and our focus is nothing more than that of supporting successful financial advisers. We are extremely cognizant that each day we basically can win or lose based on our transaction with that adviser, so the culture comes down to that of truly understanding that it is a service organization. We don’t build a product, we don’t manufacture anything, we really don’t distribute anything. Our job is to make sure that our advisers can provide investment solutions to their clients.

Speak to the firm’s financial growth.

It has been substantial. If you go back to the Great Recession, our revenue was about $54 million. Move that forward to 2016 — it was roughly $180 million. What’s driving that increase is our 625 advisers. During that same timeframe, we didn’t have a dramatic increase in the number of advisers driving that revenue, but the productivity per adviser has increased.

Where do your advisers come from?

We spend a tremendous amount of time in the recruiting process and have been extremely selective in who affiliates with us because, again, culture is key and partnerships and longstanding relationships are paramount. We look for high-quality, client-focused, hybrid advisers. Our affiliated advisers come from across the country and they all have dramatically different businesses. But they all have a couple of common drivers that we look for, and that is to serve the needs of their clients and have an entrepreneurial mindset.

Do advisers primarily come to Triad or does Triad recruit its advisers?

It’s a little bit of both. We do have in-house recruiting teams, and it’s rare that we use any external recruiters. But, we are seeing a lot more teams come to us in the process, and we actually welcome that because we believe that scale certainly will be the key to success of the wealth management firms in the future. And there is no better compliment than somebody calling you or having someone referred to you because of the positive things they have heard about the firm or the brand.

If a team showed up with $750 million in AUM. Would it be a shoo-in?

It gets you into the conversation. We’re part of a publicly traded company and certainly somebody with assets of that size is meaningful, but we’ll have to figure out if their business model lines up. The process of bringing a new adviser on board would entail the same steps that we go through with everybody.

Give us an overview of the onboarding process for new advisers.

We assign a team of transition specialists that are charged with making the transition happen. We want new advisers to become intimately comfortable with the new systems and forms, as well as with our personnel. Every step of the way a member of our team is there alongside the new adviser and their staff. It is a very hands-on, high-touch approach to setting up the branch with everything from business cards, to letterheads, to websites, email, our technology integration and so on. After the transition is completed, we don’t stop there. We are extremely focused on that relationship during the early part of post-transition to ensure that the adviser has adapted to the new environment. It’s a huge decision in their business and we treat it as one going forward.

What kind of investment products are you looking to add to the Triad platform?

We have a very deep and a very wide solution set that advisers can access; that being said, sometimes when a broker/dealer makes that statement there is a view that you have anything and everything — come one, come all — and that is not the case, because we take the product review and due diligence process very seriously. That is a huge value-add that our affiliated advisers lean to us for, the ability to conduct deep and efficient diligence, whether with regard to products from partners that we’ve worked with for years, or new entrants into the system. You’re going to have things that are standard across the industry, the funds, ETFs, variable products; but we have also built a substantial platform for solutions that would fall into the real asset area, and that includes products like private equity, hedge funds, real estate, oil and gas, BDCs, credit and debt funds, interval funds, 1031 exchanges — things that are, depending upon the risk tolerance and suitability of the investor, unique offerings that maybe could not be obtained other places. These are a part of the asset allocation that our advisers find a tremendous amount of value in. Another area that we find interesting on the product set is access to syndicate deals that advisers can utilize if appropriate, and these are typically yield-based offerings shaped as publicly traded MLPs and BDCs and baby bonds backed by real assets. What we found over the last couple of years in a yield constrained environment is that these types of solutions, created through Ladenburg’s Investment bank, provided advisers with another arrow in the quiver to meet the needs of income planning, which demographically has become so important.

What makes an adviser successful?

Empathy, and maybe that’s the wrong word to use, but it is a deep understanding of what a financial adviser goes through day-in and day-out. The challenges of client acquisition, the challenges of maintaining those relationships, the challenges of dealing with product providers, the challenges of dealing with custodians.

How do you like to spend your time outside of work?

With two boys (ages 11 and 14) and my wife of 16 years, time outside of work is happily consumed with family activities — lacrosse, debate, theater, unpaid Uber driver and, when time allows, golf and travel with friends.

What would be your first choice for a new career?

Teacher and coach.

What are you afraid of?

Snakes. I don’t like anything that doesn’t have shoulders.

Tell us something people would be surprised to know about you.

I wanted to be a clown with the Ringling Bros. and Barnum & Bailey Circus growing up.

How do you want to be remembered?

As a great husband, father and friend.

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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