Brent Brodeski, co-founder and CEO of Savant Wealth Management, made a practice of attending the Harvard Business School executive education program each year. The 2021 sessions, though, were especially poignant, highlighted by a finance professor conducting a class titled, “Is the World Upside Down or Not?”
The professor’s conclusion: The world may be upside down based on the availability of equity capital, low interest rates and outside investors looking to buy companies for aggressive multiples, giving owners an opportunity to sell their businesses or raise capital to accelerate the growth of their companies.
“I had not been thinking about raising capital, and I didn’t necessarily need any capital, but that class got my wheels turning,” says Brodeski.
Armed with that new information, Brodeski, his executive team and Cynosure, his original family office investor, sought and found their new partner, an investment firm that bought into the Savant vision and brought an infusion of capital that gave Brodeski and his team the financial resources needed to pivot from incremental to exponential growth. In other words, instead of planning year to year with a what-can-I-afford-to-do-this-year mentality, the added capital has been invested in new hires, a boosted marketing program, the integration of more advanced technologies, and the ability to take a longer view, writing five- or 10-year strategic plans rather than annual ones.
“It was a mindset change,” he says.
It also proved to be a major step forward for Savant Wealth Management. Consider that Brodeski started the business in 1992 with nothing more than a computer and $5,000 cash, forcing him to bootstrap the enterprise from year to year, even as it was expanding, until he brought the new investor aboard.
That minority investment, whose financial commitment is undisclosed, came from Kelso & Co., a middle-market private investment firm. What’s more, Kelso is committed to supplying additional capital to underwrite more technology, personnel, marketing expenditures, as well as the acquisition of other RIAs. While Brodeski and his management team retained full operational control of the company, two Kelso partners, Chris Collins and Steve Dutton, were added to Savant’s board of directors.
Now, Brodeski thinks and speaks in terms of expanding the firm by 10-fold over the next 10 years.
“Our AUM is just over $14 billion right now. Ideally, about five years from now I would like to be at $50 billion to $60 billion,” he says, while acknowledging that level of growth will require some market tailwinds rather than headwinds.
THE UPSIDE AND DOWNSIDE
Brodeski hails from Rockford, Ill., 90 miles west of Chicago. His bachelor’s degree in finance and economics came from Northern Illinois University, as did his MBA with an emphasis on accounting. One of his projects during his MBA studies was the writing of a business plan that would eventually become Savant Wealth Management. Upon graduation, Brodeski filed the business plan away and went to work for a small broker/dealer.
The head of the firm offered Brodeski one of two options: a $20,000 salary and a share of the profits if they grew above a certain level, or a $28,000 salary and no profit share. Brodeski choose the lower salary with the greater upside potential. Within a year the firm had grown to the point where the profit sharing had taken him up to $65,000 per annum. His boss thought it was too much money and released Brodeski.
“It was devastating at the time,” he recalls, “but in retrospect it was the best thing that could’ve happened.”
Indeed, Brodeski now considers it the first of a couple of turning points in his career.
He went in search of a corporate position, only to find nobody was hiring — or were not interested in hiring him.
“I think they realized I would’ve not been a very good employee because I am pretty independent minded and probably not the most political guy,” he says. “I am guessing they recognized that.”
With seemingly nothing to lose, Brodeski dusted off the business plan he wrote in college and started knocking on doors, looking for someone to fund or partner with him. That is when he came across Thomas Muldowney, who had previously sold insurance and did hourly financial planning. He reviewed Brodeski’s business plan, which outlined the creation of a fee-only RIA.
“He said, ‘Yeah, my clients need that,’” he recollects. “That was the end of 1992, and 29 years later I would say it worked out pretty well.”
Muldowney and Brodeski co-founded Savant Wealth Management as 50/50 partners. Muldowney already had a firm named Savant Planning Group. They decided to retain the “savant” name.
“Frankly, he had already paid for a logo, and we really didn’t have much money to get a new one,” says Brodeski.
The name made sense, too. Savant means a wise or learned person or scholar, and both men saw the firm as curators of wisdom.
“That is what we do,” says Brodeski. “What I have come to learn about our business is, yes, there are investments, we do tax returns, we have a trust company, we advise people on retirement, we handle and draft estate planning documents, we’ve got a law firm, but all those pieces are kind of commodities. We are really in the ‘ideal futures’ business. We provide wise counsel.”
Richard Bennett was added as a partner to the firm in 1998. About six years ago, Muldowney, 17 years Brodeski’s senior, decided he wanted to retire. Brodeski and his employees didn’t have enough money to cover his co-founder’s equity stake and took on debt to cover the balance, which has since been retired by the minority investment made by Kelso & Co. Bennett has since retired as well, but remains an investor and board member.
THE SPOILS
The favorite of Brent Brodeski’s possessions is his house on Lake Geneva in Wisconsin, a place he bought nine years ago and is home to a couple of his other prized possessions — two motorboats, a Chris-Craft and a Zodiac.
“It’s like a big electromagnet that pulls family and friends and people together to hang out,” he says of the lake house. “It is just a different vibe, and everybody is happy there.”
Brodeski also recently bought a new waterfront home in ritzy Naples, Fla., which he’s busy remodeling and outfitting with artwork. Those acquisitions will be modern works of art, as compared with the French poster art that hangs in his Rockford and Lake Geneva homes. The more than 100 pieces of poster art — rendered by the likes of Toulouse-Lautrec, Chéret, PAL and Mucha — have been collected for aesthetic purposes rather than as investments, Brodeski says, though some have increased in value over time. There are also the thousands of bottles of wine collected over the years.
The extensive wine collection convinced Brodeski and his wife, Sharon, to become level-three sommeliers.
Sharon Brodeski was a Canadian who moved to Madison, Wis., and was working as a nurse when she and her future husband met on Love@AOL in the very early days of online dating, “back when it was still considered weird,” adds Brent Brodeski.
“Wine is a passion for both of us,” he says. “We have always been intrigued by wine and joked about becoming sommeliers, but the problem is you had to either go to California or London to get training. When COVID came along, all these training organizations realized they would be out of business if they didn’t go online. So we started taking sommelier courses. We have got a lot of wine, and we really didn’t understand the thousands of bottles that we have. We just buy them. I am a wine hoarder.”
The Brodeskis’ collection consists mostly of big reds, with an emphasis on cabernets, Bordeaux blends, Sangiovese, Syrah and pinot noir.
Though his epicurean tastes make Brodeski sound like quite the spender, he insists he saves far more than he spends.
“I’ve had to push myself to enjoy the fruits of our success,” he says.
SECURITIES AND SANDWICHES
Brodeski’s investment portfolio, historically, was entirely devoted to equities until recently, when he adjusted its composition to 80 percent equities and 20 percent fixed income and liquid alternatives. On the side, he is also invested in about a half-dozen Jimmy John’s sandwich shops in New Mexico and Texas, and a small chain of dog stores in Michigan and New York that sell purebred specialty breeds, as well as all manner of canine paraphernalia. (The Brodeskis are parents to a pair of wiener dogs named Bo and Bandit.)
“I own the Jimmy John’s and dog stores with business partners. They run the businesses and built them, and I am pretty much the financier and cheerleader,” he explains. “It’s been a fun diversion, and they have done pretty well.”
He’s done some angel and direct investing, too, though his most recent one in a distillery producing gin, vodka and white whiskey did not turn out well.
“I think the guy running it was drinking too much of his own product,” ribs Brodeski.
Interestingly, despite owning Jimmy John’s outlets, Brodeski doesn’t like or eat sandwiches, in part because they’re heavy on bread and tend to bulk the waistline. He goes light on pasta as well for the same reason. Those dietary restrictions aside, Brodeski says he and his wife have a penchant for fine dining, including French, Italian and fusion cuisines, among others.
“It’s one of the reasons we bought a home in Naples,” he says. “There are 700 restaurants down here. We rented for six weeks in Naples, and two weeks in, we decided to buy a place.”
Brodeski expects to roughly split his time between his new Naples home and his place in Lake Geneva, with a bit of time also spent in Savant headquarters offices in Rockford. Like many organizations, Savant has become a hybrid workplace, with executives spread across U.S. locales such as Chicago, Milwaukee, California, Texas, and other venues.
THE FEARLESS, THE RELENTLESS
Brodeski characterizes himself as a B student who found himself competing against peers with better grades and who attended better schools. Still, what he came to realize is that, while intelligence is good (“I would rather have it than not have it”), a person’s drive and willingness to work hard and execute well are essential.
“And to be kind of fearless,” he adds. “I grew up with scarcity and had to earn my own way; there was no being a trust-fund kid. I am a relentless achiever. I can’t stop and turn myself off, and that is a blessing and a curse.”
The fearlessness he references includes the willingness to remake oneself every three to five years, as progress requires new strategies after one has already moved from “here” to “there.”
“If I just kept doing the things that made me successful in the past, they would become limiting or constraining,” he remarks.
The curse of being a so-called relentless achiever is that Brodeski is also a relentless worker.
“In a way, business is my sport, my hobby, my passion and my profession,” he observes. “Some say I am a workaholic, but I love what I do. I long ago conceded I was not going to be good at work/life balance. As result, I have to be deliberate to turn off work on occasion to make time for my family, my health and other non-business-related interests.”
THE WAY AHEAD
Brodeski has noted the emergence of 20 to 25 “platform” RIAs — such as Creative Planning, Mercer Advisors and Mariner — with valuations beyond $1 billion.
“RIAs run by people aged 45 or 50 never used to do transactions because they figured they would just keep growing it on their own and keep milking it for the dividends,” he says. “Now you are seeing founders in their 40s and early 50s thinking they cannot keep up with the Savants, the Carson Wealths and the Beacon Pointe Advisors of the world — firms investing so much in lead generation, technology, building real brands and able to deliver a lot more capabilities to clients — are deciding they want to partner.”
Even as mergers among RIAs have proliferated in recent years, Brodeski points out that more RIAs are being created than being acquired.
Brodeski understands these dynamics well, as co-founder of the Alliance of RIAs, where he rubs elbows with the likes of Ron Carson of Carson Wealth and Matt Cooper of Beacon Pointe Advisors. It is with the alliance that he learned the importance of peer networking and idea sharing.
“It’s a big ocean.”
The current M&A craze among RIAs obviously presents Savant Wealth Management with a potential merger opportunity, though Brodeski is more focused on elevating his organization to a platform-grade RIA. Still, he isn’t slamming any doors shut.
“Well, listen, there is always a price, right? If somebody wants to come along and offer us $10 billion — sold! I think my hundred employee-owners, and my outside shareholders would encourage me to do that deal, but I am passionate about what we are doing. We are not at the top of the heap; we’re somewhere in the middle. So, I’m excited about growing Savant to 10 times its size in the next 10 years.”
That scale of growth will require a revised strategy for the firm. Historically, Savant Wealth Management banked its growth primarily on expansion of the organic variety, while acquiring an average of one RIA per year over the past decade. Going forward, though, Brodeski believes the firm has the financial might to pull off larger and more numerous deals — as many as 10 per year. He sees the new partnerships as a means of securing top talent, moving into new cities, and doubling down in existing markets.
But, he insists, “We are not trying to just do M&As because then you end up with a Frankenstein business. The most important and best way to grow is organic growth. We have great organic growth already, and partnering with new firms accelerates organic growth even further.”
That means Brodeski and his team are looking to initiate some deals of their own. He would like to have a presence in the Mountain West and Southeast, Texas, and an expanded presence in the Southwest. Two recent acquisition deals — AMDG Financial in Michigan and Treybourne in Indiana — added Savant offices in the cities of Detroit and Indianapolis.
“It’s more about being very curated, to find people that I enjoy, that will have fun together and will do big stuff together. No friction, no sand in the gears,” he says. “Early in your career you make sacrifices, you do things you don’t like, you do business with people you don’t like, you hire people you don’t like. I am at the point where I only want to work with cool people who share a vision of being really big together.”
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn (linkedIn.com/in/mikeconsol) to read his latest postings.