Andrew Auerbach (00:01) Hello everybody, welcome to another edition of Beyond the Bank. My name is Andrew Orbach. I'm the co-founder of Delial Advisory Group and really excited about this conversation with a friend, Terry Jenkins, who I have known for 25 years. Let me read you a bit of Terry's bio and we'll jump right in. Terry has had a number of senior executive roles in wealth management.

in both Canada and the U S which makes him such an interesting person to speak with, you know, about his perspectives in both markets. Terry was the president of key bank wealth management in the U S one of the largest wealth management firms in the States. He was also the president and CEO of BMO Harris wealth management in the U S prior to that. I worked with Terry in senior executive roles.

Terry Jenkins (00:29) Thank

Andrew Auerbach (00:55) in private banking at BMO I've worked for Terry for a number of years, in the early days of the private bank in 2000. More recently, Terry completed a three year board advisory role with Crescent private wealth and family office. It's a six year old RIA that's had absolutely incredible growth with 50 billion in AUM. Terry was also an early investor in Crescent.

He's currently a board advisor for Halo Investing, which is a fintech firm that provides structured product access to RIAs and advisors. He also consults on technology implementation for wealth advisory firms in the US. Terry, welcome. Thank you so much for joining us.

Terry Jenkins (01:43) Great. Thank you, Andrew. Good to see you again.

Andrew Auerbach (01:45) Yeah, it's good to see you. And I've been looking forward to this conversation before we jump into the insights on the different markets. You've had a very accomplished career in wealth management, and I have no doubt you hear from perhaps people starting out now like, Hey, I'd like to do exactly what you did. I'd like to kind of climb the ladder, have success, be in Canada, US, have CEO roles and really big firms, lead big teams.

Terry Jenkins (01:55) Yeah, thank you for that.

Andrew Auerbach (02:15) What do you say to people like that in terms of maybe some insights on your career journey?

Terry Jenkins (02:25) You know, I would say I look back, it feels like a hundred years sometimes, but it's probably been 35 to 40 years of history in the industry. and I mean, I started out really just not knowing anything about the industry other than the fact that was, you know, remotely interested in investments and wanted to earn a good living so that, you know, for the family, would.

I knew I would have somewhere down the road or a good living and see where life took me. So after, you know, graduating, I kind of entered the industry and really didn't have a plan. And you kind of take one step at a time and you do as well as you can. You find out where it takes you. as you might imagine, I have a lot of people, over the years kind of say, you know, what should I do? Where should I go? And one of the

One of the earliest questions I get is, is this is still a good industry? And you know, those kinds of questions. I think for the people listening to this podcast, wondering if this is a good industry, I, you know, I would say to them, Andrew, it is a better industry now than it ever has been. certainly in my time in the industry and it's easy to start, start micro, but you know, if you look macro,

You've got baby boomers and I'll just give you a couple of fact points that I always use. You've got baby boomers retiring at the rate of 10,000 per day in the US, believe it or not. You've got this great wealth transfer we hear about so often, those baby boomers eventually are going to pass that wealth down to the next generation. You've got that going on.

You've got advisors in the industry kind of mirror the population demographic of baby boomers. And I don't know exactly what the average age is of an advisor, but I have to guess if it's not 60, it's pushing 60. So you've got a lot of clients out there who have long trusted advisors who somewhere down the road, those advisors are going to say, Hmm, you know what? I need to move on and enjoy retirement. So you've got money moving.

You've got advisor moving, the advisors moving, and then you've got this other, I think less spoken about, is the complexity of what's going on in the world, right? You've got so much diversity out there. You've got populations coming together. You've got gender diversity. You've got the amount of wealth that is moving into women's hands. You know, you look at the percentage of advisors that are women, that is far too...

below where it should be. So you've got all this complexity and I think with complexity comes opportunity. And you know, if I were going into the industry today, I would say, yeah, there is probably the biggest decisions people were, will make is not where can I find an opportunity, but which opportunity should I take? And kind of my final, my final thought there is the industry.

and the clients are far more complex than they ever have been. So I would encourage, you know, to answer your question, understand as much as you can about the industry as you chart a career path, unlike probably what you and I, well, knowing you, you were probably far more planned than I was, but understand the industry and chart your course and your career path based on...

who you are, know, know thyself, what do I like to do, what am I interested in, what kind of clients do I want to serve, what kind of business model do I want to be part of, because those are far more relevant discussions today than they ever have been. So long answer, short question, yes, better industry than ever to follow a career path.

Andrew Auerbach (06:25) Wow, there's a lot there that I'd love to unpack a little bit. First, let's just talk a little bit about you and your leadership success. So it sounds like you weren't thinking about necessarily, my calling is in wealth management, but you've had really senior roles from a leadership point of view. And so what about people that say, you know, I definitely love the wealth business, but what I'm really interested in is leading teams. What are some things or insights you would say as you've developed?

your leadership skills and how would you describe, you know, kind of what were the success factors for you as a leader?

Terry Jenkins (07:03) I've, I've kind of for my own learning and understanding of the world, try to kind of boil things down into a couple of, for me, simple concepts. when I made a decision a long time ago, because I almost went the advisory role, where I was going to build a book and, and earn a living and serve advisors. And then I realized early on.

that I got my energy every day more from helping others be successful and coaching and guiding as opposed to clients directly. And I think I was always good with clients and could work with clients and could build a book, but I got my charge every day out of the leadership side of it because the people.

that I worked with gave me the energy and at the end of a long day, you have to love what you do, right? It sounds trite, but you have to love what you do. So I would say the leadership side of it, I always looked at what motivated people and making sure that you always tried to line up what gets people out of bed in the morning, what they like to do, what they're good at, and then help them be successful.

and if you do that, the clients they serve will be successful. The shareholders will be successful along your business model works. So I would say always kind of find out what makes people tick and help them get there. And then I always looked at as a leader kind of who the stakeholders were in any decision we would make. And I kind of simply boiled the world into three stakeholders, right? You've got your clients, you've got your employees.

and a subset of your employees or your advisors, and then you've got your shareholders. And any time you made a decision or you thought about something, it has to work for all stakeholders. I've always believed if you're all shareholder focused, your people and your clients will suffer if you're all clients are focused. So you get the drift. So I would say those kind of founding principles. And then I always try to understand how to ask good questions.

And by asking good questions, you learn and when you learn, you get better at what you do and you help the business get to where it needs to go.

Andrew Auerbach (09:38) Yeah, that's a great answer. You know, I have the advantage of having worked for you early in my career. You know, when I was starting out, I would echo what you said. think one of your skills, one of the nice things as well about careers like ours, Terry, is you work with great people and you learn from great people. And it doesn't mean you try and copy them because everybody's got to be true to their own style. But you pull elements out. You say, leader does these things, you know, particularly well.

And I would say for you, everything you've articulated, I think a good sign of a great leader is maintaining relationships when you're no longer in the post. through your career, I know you've got great friendships with people that have worked for you in all kinds of different stages of your career, myself included. I know Gene and Jack, Joe, many people who have worked for you are still friends. I think that says a lot for.

For the type of leader that when you're out of the stint, you know, you maintain the relationships So clearly that matters the other piece I'd say for you, which you didn't mention which is interesting is You're always grounded around numbers, you know the financials tell the story and you were always very good at Doing everything you've described but staying very grounded in numbers, you know what we said we were gonna do and whether we're doing it so

What about that part of it? What do you think about that? Keeping an eye on the P &L.

Terry Jenkins (11:07) Yeah, that's, I mean, it's important because if you don't, I've always believed if you don't know your numbers and if you don't have a business model that says, if I do more of X, we will make more money, then that isn't going to work long-term. And you see that in so many businesses today where they, you know, they won't raise prices when they need to, to sustain a successful business.

et cetera, et cetera. But I think what's unique to the wealth business in that respect, Andrew, is especially in the advisor population, right? The advisor's numbers are the business's numbers and the business's numbers are the advisor's numbers. And an advisor in a business can only be as successful as the business and vice versa. And your talent in, I view the wealth business as a professional services business.

So your talent, if you assume it's a professional services business, has to be vested in the success. And then you go back to my three stakeholders and you say, okay, well, what does a good advisor want? Well, they want the platform that can take care of their clients. They want to have the level of autonomy and ability to serve their clients so that their clients kind of love them, trust them and respect what they do. And if you don't,

run a viable business, it's impossible for that to sustain itself over time. I always, it didn't start with the numbers contrary to what you might think, but you have to ground the business in metrics. You have to know if you're making money, you got to know where you're spending your money. And, and I think that's so important.

you know, especially in an industry like ours, where you measure my time invested in a certain client. What am I not scaling that I should be scaling? What am I scaling that I shouldn't be? You really have to understand those metrics. And once you get those metrics, then everybody's got to align around them. And then the advisors or the professionals in the business are more successful.

The clients love it because you can reinvest in the business then, right? Those profit margins, they go back to compensation, reinvestment in the business. So you have to know your numbers. And yeah, it was important to me. Let's put it that way.

Andrew Auerbach (13:34) Yeah. And I think it's also the multiplier effect that the more senior we get, the more the organization takes our lead. And so if you've got leaders of leaders of leaders reporting to you, if you're not paying attention to the numbers guaranteed as you trickle down, the organization gets sloppy around numbers. And if you are paying attention to the numbers, amazingly, the whole organization pays attention to numbers. And, and I think that's a, that's a huge element. The other

piece you mentioned, is super interesting, is how attractive this industry is right now for the next generation. You're in your 20s, 30s, 40s, early 50s. There's tremendous opportunity because the advisor age, you're spot on, is 60, because the transition is going on as much as it is, and also because the market's growing. That wealth is being created at levels we haven't seen before.

you know, through the sale of businesses, through the transfer of wealth, all those kinds of areas. And so it's, you know, as you were making that comment, it strikes me, there's not many industries where a generation coming in can look at it and say, I can actually do better than the prior generation in front of me. And, you know, that's kind of an unusual factor, right? Most people, we would be having this conversation and you hear, well, you know, the chances are that our adult children won't do as well as us.

This is an industry where they can definitely go past us.

Terry Jenkins (15:02) Yeah, I agree. there will be, there probably is already, but there will be a dearth of advisors. There are and will be, if the industry doesn't do something about it, is far too few women advisors in the marketplace, too many kind of culturally diverse advisors in the marketplace. When we don't represent the clients we serve,

creates issues and the world is changing. you know, as I said earlier, the challenge isn't going to be finding opportunities. It's going to be which one do I take? Which organization, which leader do I hitch my business to grow? Speaking from an advisor context, but that applies even to every employee of a wealth management firm. mean, you've heard the expression, you know, culture eats strategy.

or culture kills strategy. mean, the culture in the wealth management business is different from organization to organization, from industry segment to industry segment. And you really have to find who you are, where you fit and what keeps you coming back every day. Because it's not an easy business either. So it's not an automatic path to success.

Andrew Auerbach (16:26) Okay, so this is a great segue. You've had the fortune of leading teams in Canada and in the US, and maybe more of your career was in the US than Canada, but certainly you spent a lot of time in both markets. Starting in Canada, maybe you could describe for us, Terry, the insights you've garnered being a Canadian who has spent so much time as a leader in the US.

both from a client point of view and then from a macro point of view of the industry, how the industry is built. Just give us your insights on the similarities and differences.

Terry Jenkins (17:06) as you were asking the question, I was kind of doing the math. you know, we've moved to the U S in 2006, so we're pushing 20 years. so time, time does fly. And I did keep an interest in the Canadian marketplace, working for a Canadian institution and still having family here and friends and whatnot. I would say the similarities, the core similarities back to my stakeholders, right?

Your clients have many of the same characteristics, right? They're worried about, you know, are we going to be successful? Are we going to get where we need to go? Are my investments going to do fine? How do I leave this money? So those issues with clients are the same, for the most part. Your advisory population, your employee population as a stakeholder group, a little bit different because the advisory network is more complex.

You've got more options. You've got a much more developed independent network. The competition is much more intense. And then the shareholder side of it, mean, a shareholder is a shareholder. So the numbers and the metrics are kind of there. But I think if you look at the differences, the most obvious one, I'll start with a scale.

I mean, the size of the industry, depending on which study you read, was an 80 to $100 trillion industry, depending on what asset you own. So it's massive, right? And one thing I noticed when I first went down to the U.S. is you look at the size of the industry, that causes specialization, right? If you take the wealth industry and you kind of say, okay, let's break it into, I don't know, three wealth groups, right? You've got an affluent or mass affluent group.

high net worth and you've got an ultra high net worth slash family office. Because of the scale and the degree of competition, I found it to be far more specialized in terms of the, like there were competitors who did mass affluent really well. And that's all they did. At the other end of the spectrum, there are a lot of competitors who do the family office space really well.

And if you come from an organization that tries to do all of the above, or you think that an investment is the same for a mass affluent as it is for a family office or vice versa, you really realize the difference there. So I would say that the size, the specialization, the independent channel is a really interesting kind of wrinkle in the differences.

I would say technology in the US, Andrew, is because of the specialization, the client segments have different needs. So the number of fintechs that are in the space, focusing to different segments and doing really cool things unique to their segment, massive. And I always took an interest in technology because of the amount of our budget. Like we spent millions of dollars on technology. And if that technology doesn't

do what you want it to do for your clients and your advisors. You're kind of, you know, you're wasting money and you're not going to advance the business. So I would say kind of size and scale, specialization, the independent channel, the importance of technology. and then how can I, the private equity money in the space in the last, you know, four or five years has really developed. not only do you have the specialization and the firms, they're well funded.

So they can do some really cool things and that puts pressure on income and wages, the competition for talent, it puts pressure on technology, it puts pressure on valuations if you want to buy businesses. So those would be, I think, the key differences. And does Canada go down that path? Is it already going down that path? But I would say those are the...

the big differences. And I would close on this one by saying they are real, they are impactful, and I think they are a leading indicator for what can happen to an industry in a country like Canada or others around the world. So I'll stop there and see where you want to go with that.

Andrew Auerbach (21:47) Yeah, fantastic. There's a lot of places to go. How about clients before we dig a little deeper? the high net worth clients, putting aside family office, which I would like to chat with you about given how much experience you have in family office. So a high net worth client, a high net worth family, let's say a family with $5 million in vestible assets. How would they compare in Canada and us? Are they similar? Different?

Terry Jenkins (22:17) Yes and yes. I think they are similar in ways that if you can believe it with $5 million, they ask the same questions. Do we have enough to retire? Do we have enough to do what we want to do with the rest of our lives? Do we have enough to leave our children? And those are the same questions, I think.

Andrew Auerbach (22:20) You

Terry Jenkins (22:43) you know, a Canadian family or a US family will ask. I think those are very similar. I think through technology, through the depth of advice, and through competition, the US market has really, I don't know if the right word is taught the clients, but help the clients learn the importance of integrating the advice.

Right? So a firm that focuses, and this is just one person's opinion, but a firm that focuses only on investment management for a $5 million family is leaving a lot on the table. So the industry by technology, by quality of advisors has really put a fence around, we're going to manage the money. We're going to help with the trust in the States and the will.

We're going to help you figure out the tax side, either doing it ourselves or not. And this is a space where the RIA industry is incredibly strong because most RIAs will wrap that client up in some kind of integrated advice, not thinking of it as stovepipes. Okay, I manage the money, but John Smith over there is the attorney, so he or she is going to do what they do.

We have really moved the client along the curve to say, that's available. We bring it together for you. And we put the balance of a quality broad-based advisor who can go deep enough in many subjects combined with a deep bench to fill in where needed, deep tax advice, deep estate. So the families are very expecting.

of a much more integrated value proposition. And I think that's a good thing because it's important. It's not always easy to do, but it's a good thing and it's important. I think it's driven, the business models have driven that and the advisors have driven that. And as a result, the clients continue to drive it and the technology has evolved to help do that. so, so it's kind of a yes and yes answer. But

They expect a lot and they look for that integration and they look for technology-based solutions combined with excellent advice.

Andrew Auerbach (25:11) And I think your point of the broadening of advice is going to become even more important, you know, as we think about the commoditization of investment management, specifically around the impact of AI, know, Jean and I just wrote a piece that'll be coming out in the globe about like, what does AI mean to the industry? And there's no question, Terry, what you're articulating is if you're a standalone investment manager with a secret sauce, you love the markets and

you love managing money and that's what you do in isolation, that's a lot riskier as a proposition than anchoring around the relationship, right? The person that actually the family trusts as the navigator to provide broad advice and provide linkages to areas that are also outside their expertise. So, you your point really resonates with me. And I think, you know, back to our roots of private banking,

Terry Jenkins (25:48) Ha

Andrew Auerbach (26:07) I think this was very much ahead of the curve. When we sort of brought out this notion of working in a much more integrated way, I remember when we started this, was kind of unheard of in Canada, the idea of actually providing services outside of pure investment management.

Terry Jenkins (26:25) Yeah. I wondered who was going to mention AI first, you or me. we had, we had to get there. We had to get there, I guess. So, on the subject of AI, so where I come down on it, and I think nobody knows for sure, but where I come down on it is I think it will be, it can be definitely, change, huge change.

Andrew Auerbach (26:29) Well, take, take, take the bait, please.

Terry Jenkins (26:54) productive change for the advisory space, for firms in our industry, et cetera, et cetera, because it will do a lot of the things that advisors and their support teams do. And I think that's kind of level one, if you will. The challenge, and as I read and listen and talk to people on the subject, is AI really is highly dependent on the data set that you're working with.

And if you've got large client bases, let's say you're a big bank or a big wire house or even a big RIA, and you've got a data set where you've got data on the client's investments, you've got data on the client's taxes, you've got data probably from multiple investment managers on those clients or if you're a family office, you know, you've got a bill pay data, you've got so much data. And you look at large institutions that have operated in silos for many, many years.

One, the data is separate. B, a lot of the data is garbage. It's not up to date. It's not current. So AI will only be as good as the data set that you put the language model on top of, right? So I've always told anybody that'll listen, you got to clean up your data. ASAP. And if you're a small RIA, make sure you've got good habits around. If you're a good advisor,

You know, when everybody's hammering you to update Salesforce and put good data in, that data finally, I think, is going to be useful in a proactive way with artificial intelligence. The other thing is you'll look at what I think it'll change what makes a good advisor or what makes a good business, right? Because I've always gone back to look at the EQ, IQ comparison in advisors and we have a lot of smart people.

in our industry, right? Their IQs are off the chart. They've got degrees. They've got everything you need to figure out whether to buy Coke or Pepsi or what's the macro asset allocation or this or that. But what we do is emotional. Money is emotional, right? And people view money very differently. And there's an infinite number of ways an individual or family can view money.

and one family's interest is very different than another's. And that's, think, where the advisor comes in. And an advisor with that EQ that can have those quality conversations and ask the deep questions, you know, not, you know, how much equity do you want, but we want this money, you know, all the questions and those. I think that's, if you want to be an advisor of the future, you have to dig in. If you want to be a firm of the future, you have to dig in on those areas.

You know, is AI going to upend the industry? I don't think it's going to upend it, but it's going to change it. You know, we'll look back a year and you'll say, huh, it's different. You look three years, it's different. You look five. So it's going to change it over time. And I think if you want to look at where the puck is going to use some of my Canadian, I think you've got to bring the emotional and the depth of relationship in there. You got to have good data.

because you're not going to be able to really help the clients if you've got garbage in, you'll get garbage out. So I think that's where AI will go with all of this. And then that's where your tech stack in your business is so important. And one of the challenges with the tech providers is, and I'm going to

generalize where I probably shouldn't, but a lot of them don't understand the business they are providing technology for. And a lot of the wealth leadership or professionals don't understand or focus enough on the vendors that are providing the technology. And how you build that tech stack is the way of building the bridge between what I really need for my business. Boy, if I could only do this with the technology and communicating that to a vendor.

and say, here's what I needed to do and build the same language and you know, what's your course system, where do your APIs come in, what's your umbrella? That is so important, given kind of where things are going, my opinion.

Andrew Auerbach (31:21) Yeah. Yeah. I think it's, I think it's spot on your comments about AI as well is from a client lens. You know, if you're not anchoring Terry around the emotional side of our business, that, that is the stuff that actually is the moat that makes our business so important is the ability to build trust, to work with families in a way that you're really focused on their interests exclusively. You're answering those bigger questions, which are the ones that really matter.

around, I have enough to retire? Can I leave a meaningful legacy? The things you described earlier, if you're actually anchoring around why I chose Coke over Pepsi, to use your earlier example, that's where things are going to be more problematic in the future. Because I would argue in the past, the ability to discern whether buying Coke or Pepsi was a good thing or not, did it add value to the client? Those things were largely

uncheckable from a client point of view, because they're hiring us for our expertise. The difference is in an AI context, when everybody has a built in consultant, analyzing the portfolio before the client meeting. Now the client is armed with information, they have the answer, they have the three questions that I need to ask Terry related to why I bought Coke instead of Pepsi. And so if all of your value is around outsmarting the market,

then I would just echo your comment. think that is more problematic than it's even been. I think it's been changing anyways, but in an AI context, that's not a great place to hang a shingle.

Terry Jenkins (32:59) Yeah. Yeah, I, I agree. And I think one could argue that the evolution of the independent channel, is really driven by the desire, you know, is it a client value proposition or is it an advisor value proposition? would, I would argue it's an advisor proposition that creates a legal entity structure as a fiduciary.

that allows their clients to be, or allows their advisors to be the type of advisors they want to be with their clients as fiduciaries and get around the same side of the table as the client. And it's built on independence and a fiduciary nature. that, you know, that is a lot more sticky and easier to, not easier, but better for building trust.

And then where the AI and the data management comes is it gives you an easier way to allow the advisors to be proactive with clients. Right? So the AI will, you know, there's, FinTech companies now we've seen that will API with Salesforce and they'll go into the Salesforce data and they'll tell an advisor that, you know, they have 31 clients who've had an event in their life in the last

little while and the advisor should be reaching out and here's why and you know there are 64 and a half or whatever the event is they'll go through all of that data in a nanosecond and create opportunities for those advisors and then AI takes the next step further goes into the internet looks at changing legislation so there's just it gets so deep in the ability to be proactive as an advisor in all facets.

of advice is much deeper around building trust.

Andrew Auerbach (34:58) Okay, so this has been a fantastic foundation build. And what I'm hearing you say in the contrast is the size and scale, the breadth of advisory firms in the U.S. have all been beneficial to clients. You I think you used the words that it actually has trained clients in terms of raising the bar to be more specific in what they're looking for out of their advisors. Why don't we talk a little bit about Crescent? I think Crescent is

an incredible RIA firm that started as we've both shared from virtually zero to 50 billion in AUM. Maybe you can use that as a little bit of an insider test case, given you're so familiar with Crescent, as to how to carve that unique value. Why has Crescent been as popular, as successful as it's been?

Terry Jenkins (35:50) so I would say, and I think Crest, it's probably been in existence between six and seven years, give or take. and knowing the founders, and kind of being there early on, you know, I had little or no benefit to add to the growth because I wasn't in the business every day. but I would just ask.

what I thought were good questions, right? You know, what's your value proposition going to be? Are you going to do tax work? Are you going to do family wealth services? Do you know what you want to be when you grow up, et cetera, et cetera? And what they did really well is they defined who they want to be right out of the gate. And they did their homework on the industry. They blended industry experience with business acumen.

you know, the founders, come essentially from the private equity space who really couldn't get what they wanted in a, in the wealth management industry, believe it or not in the U S. So they said, will build their own? and they brought to the table some industry, you know, some industry veterans who could put a, you know, a dose of reality and, and what they were building. And then they evolved the.

value proposition by really understanding the numbers, the metrics, et cetera, et cetera. And they understood early on that, you know, the investment business pays the bills and is very important. But to your earlier comment, it is more and more commoditized. So they planned to round out the value proposition. They refined the

family office value proposition and what they wanted that to be. And then they created a growth strategy and blended it with both organic and inorganic growth. So it's so easy to look at fast growing firms today and say, you know, they did a roll up and they're worth this much because they went out and bought a bunch of businesses. Well, that really is not the case with Crescent. mean, sure, there are acquisitions in there.

but it is not a big chunk of, of the, of the 50 billion. and then they really tried to understand what the advisor value proposition is, what, and how does that fit with what they believe the client value proposition is, et cetera, et cetera. So very thoughtful around how they build it. And then I think most importantly, is they define the culture that they wanted right out of the gate. and they said,

You know, we want our employees to be owners. We want employees to have a vested interest. There's one crescent. This isn't a portfolio of smaller businesses that do their own thing. You know, they, you know, are they learning as they go? Of course. And I'm probably oversimplifying it, but, but the cultural attributes are defined right from day one.

So that when they do an acquisition, they test the company and the owners and that against, it a cultural fit? Is it not? And if it's not, no matter what the price or whatever. culturally, it's as well aligned as you can imagine, given the rapid growth. And then they managed the metrics really carefully understanding the businesses.

They manage employee engagement very carefully, advisor engagement, and it's a blend of inorganic acquisition, advisor attraction, and client attraction. And those kind of three things have driven outsized growth. And they stuck to their space. It's a multifamily office space. And do they have smaller clients? Sure. But most often, those smaller clients are...

relatives of other clients or business owners that might be worth, you know, eight figures, nine figures in wealth, but don't have a ton of liquidity. it's, you know, where there is a smaller client that appears to be outside of the segment, they've been very strategic. So you put those things together with excellent execution and sure, other stumbles and mistakes, obviously along the way, but you fix the mistakes and you move on. And it's been quite a success story.

I've been an early investor in it and just watched it grow. And I was formally advising for three, three and a half years. And it's no longer a startup, I would say.

Andrew Auerbach (40:55) Yeah, pretty amazing story. And you know, there are now close to 20,000 RIAs in the U S and what I find interesting, particularly with how you've described this, Terry, the private equity impact, the private equity firms are consolidating so many firms now that private equity sort of discovered the RIA space as a really attractive place to invest because it's a recurring revenue business. It's a high ROE business.

There's tremendous scale advantages given how many RIAs have been set up in the US. And notwithstanding all of that &A activity, the RIA space continues to be the fastest growing part of the market, which tells us that even today, banks and wirehouse advisors are still breaking away to set up RIA firms. Notwithstanding all of that &A activity, I had a chance to talk to Sam Safe in an earlier podcast and

He made the comment that the U S might be in the fifth inning for the independent channel. And Canada's really just started the first, you know, we're, very early, but it's hard to imagine all the things you've described in this conversation, a, wealth accumulating, you know, the fact that wealth is growing so much in Canada, the number of businesses that are being sold, the generational transfer of wealth. These are very similar secular themes that kind of created.

this need for the RIA channel in the US. And so it's just very interesting to hear you describe, you know, one of the great success stories. There's obviously not 20,000 Cressids out there. They're much smaller RIAs, but the notion of why to set up the firm and to carve a unique value, I think is what is going to really become more prevalent in Canada.

Terry Jenkins (42:45) Yeah, I agree. And I think with, you know, RIAs in particular, you've got different legislation in the US than you do in Canada. So if I'm not mistaken, it's a little bit harder in the US to go to that model. You have in the US a number of providers that early on understood

Andrew Auerbach (43:02) Mm-hmm.

In Canada, sorry, Terry, in Canada, it's much harder, I think you were saying, in Canada than the US to set up. Yeah, yeah, yeah. Yes, yeah, yeah.

Terry Jenkins (43:16) correct. Yeah. Did I say harder in the U.S.? No, no, it's far easier in the U.S. Yeah, my apologies. In the U.S., you've got providers who understood the trend and whether it's Schwab or Fidelity or whomever, you can literally, they will set you up and you'll be in business in no time. And essentially, you own your business. And make no mistakes. mean, banks are still very competitive. They will be very competitive and will remain, whether it's Goldman or...

Andrew Auerbach (43:42) Mm-hmm. Mm-hmm.

Terry Jenkins (43:45) with Merrill and all of that. But I think an advisor really needs to understand who they are and what kind of value proposition they want to work in. And RIAs are not for everybody. know, going out on your own is not for everybody. It's not for the faint of heart. But they are right for a certain population and banks are good for a certain population and all things in between. The other interesting thing

Andrew Auerbach (43:57) Mm-hmm.

Terry Jenkins (44:13) that's happening is you almost have a scale of value propositions, right? You can, at one extreme end of the scale, you can be a salaried bonus type of employee and serve clients in a bank and it works great. You can move down the variable compensation in the bank. You can go into the bank broker dealer and have kind of no limit. In the US now you're seeing banks who will

almost let an advisor go out on their own, they'll, you know, they'll, they'll backstop them and go even further. So it goes back to my earlier comment at the outset is if you're, if you want to get into the industry, really learn who you are, what makes you tick and you can chart a career path in any one of those. And, and they're all very, very viable. you know, the other interesting fact, and my numbers might be a bit dated, but you know, to your point, the RIAs are

around between 15 and 17,000 right now and growing at, you know, a thousand or more every year. The broker dealer, the number of broker dealers in the U.S. is shrinking. I think it's down, you know, five, six, seven percent in the last five years. So the move to the fiduciary model, the legal entity, the complexities, all of those things, that delivery model or legal entity structure is shrinking.

Andrew Auerbach (45:26) Mm-hmm.

Terry Jenkins (45:41) and you've got the other side of it growing quickly. And is it the be all and all? No, but for the right advisor and whatnot, it's, you know, it's a very realistic and the degree to which that happens in Canada. I'm not going to say it's inevitable, but you know what? It's, I believe it's going to go that way in one shape, one shape or form and how it gets there. You guys will all figure that out, but I think it's going to go down that path, especially in the ultra high net war space.

Andrew Auerbach (46:09) Yeah.

Yeah. And I also think Terry, to your point, which is such an important one is this is good for every segment of the wealth management industry. This is good for banks. This is good for brokerage firms and good for independence that more choice creates more competition, makes everybody sharper, creates a bigger technology field in terms of entrance, trying to support emerging new players. And ultimately it's great for clients. And it doesn't mean that one channel

is bad and one channel is good. They're all important channels. Just having more of them. think the US has been such a great proof point of that, is great for the whole industry. Your notion of how banks are creating RIA structures is an example of that evolution. You need to have the competition to drive different types of models. I've kept you, this has been a great conversation. I do want to get your perspective on

Terry Jenkins (46:51) Mm-hmm.

Andrew Auerbach (47:10) family office, given how much work you've spent in the multifamily office space. In Canada, this is an area that's actually the fastest growing part of the market, as you know, because of how many businesses are being sold and how much wealth is being created. And so we're very early in terms of kind of the multifamily office kind of construct or focus on ultra high net worth. What are your insights on that space? You know, somebody who is

thinking about a single family office or a multifamily office and just your commentary of the US, which is probably, you know, even more advanced than Canada compared to even the RIA and independent channel that we've talked about.

Terry Jenkins (47:56) yeah, couple of things that, that I would say the way I help myself understand the marketplace for family office, because there's no, in my opinion, there's no real clear definition, right? A family office does not look like this. We've all heard the expression. If you've seen one, you've seen one. so I would start by saying the ultra high net worth segment.

does not equal family office, right? They're not one in the same. I would argue, or the way I think about it is the family office segment is a subset of an ultra high net worth segment. And once you say the ultra high net worth is the umbrella, family office becomes a segment, right? And then you say, well, what's the difference, right? And a family office, again, the way I've always thought about it is

where you take a family and as their wealth grows and their complexity grows, they might be dealing with four different investment managers, two trust and estates attorneys, a tax compliance person, a tax advice person, maybe somebody paying their bills, et cetera. And they're dealing with all these vendors, right? And they're thinking, my God, how do we make sense of all this? Right? So they say, you know, I need to hire somebody.

to sit on the same side of the table as us to help us manage all this stuff. Like what's our asset allocation across all the investment people? Does the estate plan match with the investments and how are we gonna take care of the kids and what's the energy? So they hire somebody on the same side of the table that they pay directly to help manage the investments, right? So now you're into a family office. And some ultra high net worth clients never do that.

And some do. So that's where I draw the distinction where that family office representative is an employee of the family sitting on the same side of the table. Then they say, gee, you know, we'd like more. We'd really like to have, maybe we'll manage our own money. We've got very high wealth. So they hire an investment COI, right? You'll hear the term OCIO, which is an outsourced chief investment officer. They'll hire their own, right? And before you know it, they've got

Andrew Auerbach (49:55) Mm-hmm.

Terry Jenkins (50:22) three, four, five, six employees, hence the family office, but it's not all trying at work, right? Or they're all trying at work, but it's not the same thing. So what's happened over the years is you've had firms much like the ones I ran where we said, you know what, you don't have to hire your own employees and do all of that. That's a lot of work and you really want to do that. So we would put employees on the same side of the table. We would build value propositions to say, hey, we can do it.

less expensively for you if we do it for five, 10, 15, 20 clients and we build an advisory team, what is now in our multifamily office business, right? To do this work on the same side of the table. And it's tough because you're separating product versus advice and you you get into comp and value proposition, but there's excellent multifamily offices out there. And you know, back to Cressa, that's

kind of what Crescent does, right? And how do they manage the private investments, the public tax, et cetera. it's a long way of saying one doesn't equal the other. And when you talk about it, you gotta have whatever your context is and however you define them, you gotta have that so that you're always coming back to, well, you say family office, here's what I mean by, let's make sure we're using the same words in the same language.

so I'll stop there and then see if you want to dig in anywhere else. But, but I would say it's an industry unto itself. the other thing in that space, Android technology is even more important. Data reporting, where the wealth is, how it cuts across generations, right? What's generation one, generation two, generation three, generation one, you know, this child's.

line, are the trusts and so data and reporting and how you build that tech stack for a multifamily officer, family office is super, super important. And you've got technology now that specializes in all of those areas and just how you pull them together to do what you want it to do for your family. And I would argue multifamily offices up to a very large level can do that very well. You know, they have deeper pockets, they can save the family a lot of mistakes.

Andrew Auerbach (52:32) Yeah, I think that's...

Yeah, I think that's a great flyover. in Canada, you know, my, my observation is because the industry is a lot more immature. The tendency is for a lot of families to think about single family office after selling their business and they don't necessarily have access to the breadth of knowledge that's available in the U S to recognize what you've just articulated so well.

that. That's a lot to sign up for, to do that on your own. You may have solved for your former CFO who's going to maybe run your family office, but that's one role. You got a few others to think about on top of that one. So that's a great way of thinking about it. Absolutely.

Terry Jenkins (53:13) Yeah.

Yeah. Yeah. Yeah. And it's, it's, it's expensive. And it takes a lot of wealth to justify it as a percentage of your wealth in doing your own family office. Right. So it brings the capabilities down to a much more reasonable wealth level.

Andrew Auerbach (53:33) Yeah. Yeah.

Yeah, it's terrific. This has been a really, really interesting conversation, Terry. Thanks so much for sharing all of your expertise. Before we close, is there any area that you wanted to build on or anything we didn't cover?

Terry Jenkins (53:54) no, Andrew, would just close by saying, Hey, this has been a great industry for myself and my family. And we have benefited tremendously. We've given a lot back, believe me, to, the industry and to our people and whatnot. It will continue to be a great industry charting. course now is so exciting because it's, know, if you love change and the excitement of all the things we've talked about, it's a great time.

Andrew Auerbach (54:09) Mm-hmm.

Terry Jenkins (54:23) be in this space and you know what go for it. mean whatever whatever you want out of life or career path or whatever this is a great place to hang your hat.

Andrew Auerbach (54:34) All right, that's a great place to close. That was the one and only Terry Jenkins. Terry, thanks so much for spending time with us and I'll talk to all of you soon. Thanks again, Terry.

Terry Jenkins (54:44) Thanks.