Ready For Retirement
Ready For Retirement
Root Talks: How Do We Approach Team Building?
Root Financial is redefining what it means to serve clients by putting team culture front and center. In this episode, James and Ari dive into the firm’s bold move to hire a Head of Culture—an uncommon role in financial advising—dedicated to supporting the growth and well-being of their advisors. Why? Because when advisors thrive, clients get the personalized attention they deserve.
At Root, we’re intentional about avoiding the usual industry traps, like overloading advisors with massive client lists or sales quotas that can compromise service. Instead, we focus on sustainable growth, aligning our goals with yours and using tools like OKRs (Objectives and Key Results) to stay on track.
With a Net Promoter Score of 91—well above the industry average—we’re proving that building a strong internal culture leads to happier clients and better outcomes.
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Timestamps:
0:00 - Company culture affects clients
4:08 - Ari's quick story
5:59 - Hiring a Head of Culture
10:54 - Advisors have how many clients?
14:24 - NPS and retention rate
17:28 - OKRs
20:57 - What makes Root different
Create Your Custom Strategy ⬇️
This is going to be a fun episode. I say that most weeks because I think they are all very fun, but the past few weeks we've been discussing behind the scenes at Root. What does team building look like? How are we actually building a team that makes it so for all clients and listeners and viewers that we're really giving the optimal experience? We talked about what's the difference when you work with one advisor versus another. Today's really the final step there, where we're going to be talking about the culture at root.
Speaker 2:This is another episode of Ready for Retirement. I'm your host, james Canole, and I'm here to teach you how to get the most out of life with your money. And now on to the episode.
Speaker 1:We recently brought on a head of culture. Now we are a financial firm. Why the heck would we do that? And how does that relate Should I say translate to the client experience? Well, what we want to go into in detail today is not just why we have a head of culture, but how do advisors get compensated. Like you want to know the behind the scenes, truly, of what does it mean, when you're a root client, to know that you are really getting the most out of your money, because this is money you work very hard for. We want to make sure that we are giving you that optimal experience and we want to show you why. So today we're going to hop into head of culture. Why the heck did you hire someone with the title head of culture, james?
Speaker 2:Yeah, good question for you asking like why is that even a question? This is a podcast about Roth conversions and estate planning and tech. Yes, it is. That being said, for those who don't know, we said this. Ari and I are part of Root Financial and Root Financial. We are a team of advisors helping clients to implement these strategies that we talk about all the time, and a lot of clients listen to this podcast. A lot of prospective clients listen to this podcast and have these types of questions, and I think, really, what we're trying to build is something that's different, and it's different so that we can better serve our clients.
Speaker 2:So traditionally, it's just okay. I've got an advisor, my advisor picked some stocks from me or pick some mutual funds for me, and that's their job. They're off in their office doing that, and I think the industry has evolved so much in terms of what does an advisor do, and we want to be on, hopefully, the cutting edge of what that evolution looks like in terms of what is the value that we can provide to clients look like, and a big part of that is, I guess I'll say, a big part of the client experience comes down to the team experience. What I mean by that is so many advisors. I talk to wonderful advisors. They love their job. They love their work, they do incredible work for clients.
Speaker 2:But then something happened at work. Typically it has to do with an acquisition. Someone else acquired their firm and now all of a sudden they're not really allowed to do great work. They're not allowed, they're not really encouraged to do great work for clients. They're encouraged to say hey, bring us a list of 50 friends and family and we want you to consistently call them to see if they'll become a client. Or bring us a list of clients that you think can refer other clients to the firm.
Speaker 2:And it's become so short-term revenue-driven, short-term profits-driven that it just takes the life out of the firm. It takes the life out of the relationship and it leads to really strong returns for whatever firm acquired this firm in the short term. But it kind of squeezes all the juice, it squeezes all the life out of it, to the point that the culture just kind of dies there. But when the culture dies, people leave. When people leave, or when advisors leave, clients are left wondering well, what just happened? I thought we had just developed this plan. Like I came to you because I'm about to retire and I need someone to guide me through these really important decisions over the next 30 years. I'm three years in and that person's gone. Now what do I do? And there's a couple of places we could go with this. They say, oh well, work with this other advisor, work with Sally instead. Hey, sally's great, but she's completely different than Joe, who just left, or then Karen, who just left, or whoever. And so there there's.
Speaker 2:There's an issue with like consistency of advice. I think at a lot of firms. But the bigger issue is, if you don't have a great team, if you don't have a place that people want to be, the people get excited to be. The person who pays for that is the clients, and they pay for that through. A non-enthusiastic work environment leads to worse outcomes for clients, leads to turnover, leads to just suboptimal ways of being. So I can keep going with that. I don't know if you want to interject or if I've gone on too long, gary, but there's, I want to make sure I'm addressing the question you first asked.
Speaker 1:Never too long and I want to tell a super quick story. But then I want to come back to that question of so is there one person in charge of head of culture, and what the heck do they do and how do they manage it? And how many people do you even have at root? Now? So the real quick story is when my parents were working with Wells Fargo, they used to try to book a meeting at three o'clock with their advisor. It was always very difficult. They'd always say they'd be busy and one time my dad said hey, can I book you out three months in advance? I'm sure you have a three o'clock available. And they were like no, I'm unavailable. And really what it was is that advisor at three o'clock. They just know the system at Wells Fargo and this could be a Wells Fargo thing, it could be.
Speaker 1:I don't really know other than after three o'clock they know that they truly can go home early as long as they've spoken to X number of clients. That's not me bagging on any individual firm, and certain firms, I'm sure, have different rules, but really my dad wanted to meet at a certain time because it was best for his schedule and they spoke to two clients that day. They were like I don't have to speak to more than that. And the crappy thing about our industry truly sometimes is that advisors are so overwhelmed with meeting their quota, hitting their revenue goals, that they go. I just can't spend as much time as I want on current clients because I'm so busy trying to get new clients, because my goal just changed and now I have a new person that works under me but turns out that's someone that's going to shift in three months because it's only temporary.
Speaker 1:So this idea of emphasizing culture which, james, I think you push more than anyone I've ever met, is something that is really easy to not do, because we could just drive revenue like crazy by saying every advisor has to work with 400 clients because then our value of the company goes to XYZ and then clients like my dad go. Why can't I meet when I want to meet and like it? This really does hit you as the end client. So bringing it back to the culture, that head of culture, why did you bring someone whose only job is to do that? Because I've never heard of any other company that does that.
Speaker 2:Well, because here's the thing Most financial firms do this, but they do it once they've acquired. There's a lot of private equity money in the financial advisor world, meaning private equity firms buying financial advisory firms because it's an attractive acquisition target for them. And so what you get is you get a private equity firm and they'll back some what you call aggregator, and this aggregator will and I'm not saying all of them are, let's say, private equity company came to Root and said hey, root, we're going to provide you all these millions of dollars and your job is to go out and buy other firms and that's going to be your growth strategy. Cool, we buy a firm up the street, we buy a firm in Florida, we buy a firm in Kentucky. 20 firms later, you've got 20 different systems, 20 different cultures, 20 different ways of doing things, 20 different groups of individuals. You're trying to mesh. It's just not fun and the culture dies the system. That's a very difficult way to grow and not an optimal way to grow in my opinion, although it's a very popular way for a lot of firms.
Speaker 2:And so what my mindset's always been is how do we optimize for fun? Now I think people hear this at ping pong tables and take every Friday off. Type fun, no like. Fun is doing awesome work for awesome people. That's fun. Fun is only working with the smartest, with the most driven, with the most compassionate people that's fun. Fun is only working with people that, truly, that I'm going to look forward to seeing at our next team retreat in person. Fun is doing awesome things and being at the cutting edge of what we can provide to our clients. Fun is winning and growing and doing great. So, like, all those things are fun. Fun in the sense of it's engaging, it's purposeful, and if you can focus on fun, and if you can focus on doing that for 30 years, 40 years, not I need to do something because the private equity firm that acquired us gave us five years to hit these quotas before they're going to flip and sell the company to someone else.
Speaker 2:That's not fun, that's not optimizing for what we want to optimize for, and so you get a lot of these firms that bring in typically they'll call it a chief people officer or head of people, whatever it is and it's to say, hey, we're broken, come fix us. We're trying to combine 20 different firms with 20 different cultures and 20 different personalities. Can you instill HR policies, and it's a very reactive measure to trying to fix a problem that I don't think can actually be fixed. What we're doing is we're saying how do we try to get proactive about that? How do we try to create an environment where, hopefully, this can become a place, root can become a place where, if you want to come work here, you can work here for the entirety of your career and have a lot of fun doing it, serving awesome people, serving people that you're going to look forward to getting to work with, serving people that are going to look forward to their meetings with their advisor, because it's always a pleasant, it's always an invigorating exchange when you get to do that.
Speaker 2:And so, if we can get on the head of that to say how do we define what our culture is?
Speaker 2:How do we define the standards that we set to uphold that culture? How do we define what it looks like to work with Root? How do we get incredibly selective about the team members that come on board here at Root so that every time we add a new team member, root gets better. It doesn't get more I don't know unruly. It doesn't get more challenging to handle. It doesn't get more okay, one more person tracking. No, we get better because the type of people coming to us are awesome people and we all went and doing that. And so the best thing that we can do for clients is to create that environment. And again, environment of fun doesn't mean ping pong tables and happy hours. It means doing awesome, meaningful work with really great people and having a structure, having an environment where you're going to be fully developed, that you're going to come in already really, really great, but we're going to be committed to your personal development, to your professional development.
Speaker 2:And sometimes when I say this I mentioned this on another podcast I almost feel like a little bit silly saying it, because we've just barely scratched the surface of what's possible. And so if I look at Root Today, I think Root Today is awesome and incredible and I see so much opportunity just to make it even better. And so when I say this, there's so much to be done and so many cool things to have happen. But why that head of culture? Because clients win when we do that. No, they're not going to work with that individual directly, but they're going to work with an advisor who's going to love being part of Root and is going to be a direct contributor to Root, who's going to have an environment where they're supported, where they're developed, where they're constantly given what they need to succeed, and it's not just like oh, we hired a role and everything is fixed. There's a whole bunch of roles like that that we can leverage across the team to serve clients better, and that's just part of what makes work fun, and that's because of these better outcomes.
Speaker 1:We've talked about NPS scores in the past. How happy are clients? And James, I don't know exactly how long you ran Root before I joined. Was it two, two and a half years? Something like that? Three, three years? Yeah, three years.
Speaker 1:And one of the first things you told me was hey, you can take vacations as you see fit. And at that moment you know I not worked for you yet. I didn't really know what my day-to-day was going to look like. I had a few plans of things. I wanted some trips I wanted to take. I don't believe I took a single vacation that first year, and that's not due to my choice. That is due to my choice. That's not due to me being like you know, I just want to prove myself. I had more fun at work than I thought I would have traveling, and now I do have a lot of fun traveling because I have my fiance and there's things we like doing.
Speaker 1:But the point of the story is this is someone for all of you listening, who's saying the right things, but also coming to me going hey, you told me you want to take some vacations. You haven't yet. Why is that? And I can say it's because I really enjoy being able to do this, but I actually want to turn off by. Instead of taking a vacation, I just don't come to work this week or check my phone and I just play soccer, and that's what works for me, which, if you can't tell, is the case.
Speaker 1:But for a lot of you out there, you might not even know that there's venture capital money that come and try to buy smaller companies, and I know my parents would have no idea about any of this and then they'd go well, why isn't, why aren't I getting the ideal experience? And it's because of this culture, and one of the big things that people just don't know about because how on earth could you is how many clients is my advisor working with? And I bet if any of you working with an advisor today went to your advisor and said, what number am I? You probably don't even know and I'm not even sure they would tell you, but my parents were number 187 out of 400 clients working with one advisor at one of their firms. I don't believe I have more than 400 Facebook friends, let alone 400 people that I really know. So how do you make sure that our clients are always working with an advisor that's going to give them that optimal experience with real attention.
Speaker 2:Yeah, that's the. You know, we did our master plan last year and I want to do some update to this. But like that, that is as I talk here. I'm not going to pretend like I have it all figured out, but I think we have a team that's doing really excellent work and we're committed to figuring out what I mean by that is. I mean, no advisor at root currently is at that cap. So when I talk about numbers with the team of, hey, here's the max number of clients. It's a very soft number. It's like a very soft max because, hey, if we get close to this and we realize we can't really do much more work for more people without the service deteriorating, great, like, let's lower that, let's let's get that number right.
Speaker 2:But I think one thing that's important to note is a lot, a lot of advisors I mentioned this before is what is bonus based upon? What's based upon how you get out there and you hunt down your friends and your family or people at rotary club or people at church or whatever, and um, get them to sign up and that's what your bonus is based upon, part of it at least. We don't have that expectation for advisors I think we very intentionally wanted to create a firm where, if you're an advisor, we want your time to be 100% freed up to do awesome work for your clients and if you meet someone at the Rotary Club and if you meet someone at church and become a client, awesome, you're not being incentivized to do that. That's just going to naturally happen because you're an awesome person, an awesome advisor. But when we're looking at bonuses, by far the two heaviest weights of advisor bonus, for example, is client NPS score and retention rate, two things that help us determine how well are we serving clients.
Speaker 2:We survey clients and the NPS score for people listening is just it stands for net promoter score. It's just a benchmark to say how happy are clients. Are you getting the services that you're looking for? As measured by a couple of different factors and our NPS score. Last time we did this well. I guess for perspective, in some industries anything over a zero is good. That means hey, you've got as many people who are promoters of the firm as you are detractors.
Speaker 2:I think financial services, depending on where you look, 40 and above is considered good. You're doing really well if you're above 40. We're at 91 in our last round of NPS scores, the highest you can get is 100, which means literally everybody says there's not a single person that has a detraction score or even a neutral score. So what that shows us is okay. That's what we're looking at to measure how are we doing? We think we're doing great work. We think that as we build stuff out and design these structures for clients, we think it's going well. But we need to hear from clients through customer satisfaction scores that happen after each meeting, through NPS scores, and that's just our way of saying how are we doing as a firm. And that's also not just something we do for fun, but that's what we incentivize for advisors to say this is the priority as we're working with clients. Love it.
Speaker 1:I want to discuss OKRs briefly, which many of you may never have heard of, including me. A few weeks ago was not privy to these OKRs and what they mean. And really, when we talk about building an amazing company, yes, everyone says it starts with the people and it's all about, yes, do you have the right people in the right places? And, yeah, one bad apple can take a company down and all these things. That is real life. And when people say, I want to make sure I always have the best firm, and I'm, you know like there's people that will say I and they want to promote root because they love where they are. But there's a small I want to say small, but there's a good amount of people that probably start working with root, and I've only know this because I've spoken to a few of them. So I'm now assuming many of them have these thoughts that go look, I do love Root, I want to be with the best firm because I've worked so hard to get what I have.
Speaker 1:But how do I know the services won't diminish? And one of the ways to do that is by having a system to make sure those services don't diminish. Well, there are certain companies that use certain tactics and strategies to ensure that everyone is going at the company with the same vision, but not just vision get the most life out of your money. But here's how we're actually doing that. So, james, I know you're really spearheading this whole effort on OKRs within the company. Many of you listening might be working at a company going yep, we're actually using this, and the fact that you even said that tells me you guys are doing the right things. Some of you are like don't even know what you just said. Can you explain that in English? What are these OKRs and how does a company like Root use this to make sure services never diminish?
Speaker 2:So OKR stands for Objective and Key Results. It's really just a goal-setting framework. And you think back to companies Intel in the late 90s or Google or some of these giant firms that did incredibly well and you assume that it's just because they had better technology and that's what drove it in the layers and you start reading about what they did. Yes, they have great technology, but it's because they had this singular focus on creating the best technology and working together as a firm and bringing the right people to the table in terms of having certain projects. What do we prioritize? What do we focus on? How do we get full alignment in the work that we're doing? And you start to realize that this is so much more impressive than just having great technology. So Andy Grove was the CEO or the ran Intel in the late nineties and this is kind of something that he spearheaded, where he's just he's widely regarded as just maybe one of the best managers of all time in terms of how modern management, what that looks like and some of the things that were done, and it's just a way of saying look what is. I'll relate this to Root specifically. What are Root's goals this year? Well, we have this general framework of inward, outward, upward. Upward is the growth side. Yes, we have growth goals, every company should have growth goals in terms of new clients, in terms of whatever it is. But if we start there, we're missing the pieces that are going to drive that growth. They said, okay, great, we got to provide a great experience for clients. That should be the first goal, right, because we provide a great experience for clients. Then that leads to the growth, kind of. But still that's not the foundational piece. The foundational piece is the inward piece. So, when we think inwards, what can we do to create the right foundation, to develop advisors, to onboard the right advisors, to create the best possible team? That is our focus, because once we get that I want to say once we get it right like we don't have we have a lot of things really right by that, but there's always going to be opportunity to do better. So how do we set an objective at the company level for what it looks like internally, at Root, to be developed as a team member, to be able to have career paths, to be able to thrive within the organization, because that enables us to meet our objective.
Speaker 2:When it comes to service growth, how do we make a root service offering the gold standard in the industry when we have a team of incredible people that are great at what they do and feel fully empowered to help contribute to these growth initiatives. We have a great service model today and we can make it even better. What does that look like? What are the things that we can work on? How do we measure success there? So there's the objective of what's the goal here and what are the key results that we're looking at to define whether or not we've had success. Then, finally, we have the upward objective. What does that actually look like in terms of new households we're able to serve?
Speaker 2:In terms of new service offerings, we're able to talk about one of which we're going to talk about in a couple of weeks here on this podcast a big announcement. So I don't know if that's next week or in two weeks, I'm afraid, exactly when this will be released and when that will, but stay tuned for that. So we set these goals, but goals do us no good If we say, hey, here's Roots goals and everyone says that's cool, that's awesome, that's inspiring, and then inspiring and then goes back to what they're doing. The goals need to flow down into the department level. Those two goals then needed to flow down into the individual level. So each individual when you have the best individual, say we can be a part of this. We can kind of open source what we're building here to create the best environment for the team, which creates the best outcomes for clients, which leads to success for Root, which can then be reinvested into the team, into clients, and continue that virtuous cycle.
Speaker 1:Do you guys hear that excitement? That's why it's different here and James can talk about standard deviation withdrawal strategy, but this is really what lights him up and what makes me really excited to be here is that we have someone like you, James, who is spearheading this with excitement, because it's really easy for people to just go yep, I don't have a Ferrari yet, so we're going to grow by $200 trillion this year until I get that, and then we're good to go here. And you know, if people quit, people quit. That is once again connecting it to my parents one more time. They were number 187, working with an advisor that had 400 clients.
Speaker 1:Guess what happened? They had another advisor that quit. So now an advisor not my parents, but the firm had an advisor that quit. Guess where those clients went? They went to my parents' advisor. So now my parents' advisor has 600 clients that they are supposed to manage and then my parents are wondering why they don't get great guidance. A very simple example connecting to why this culture is so important. Love this episode Really insightful, James, anything you want to leave people with.
Speaker 2:No, just if you're listening and still confused about how much you should convert to your Roth. Sorry again, this is totally different and you may not care about this, and that's totally fine. Some people do, and so we wanted to say, like, if people are asking, let's, let's make a podcast and talk about that, because what we're growing is with a team of awesome advisors and team members and a great group of clients that we get to serve along the way, and if you're listening and you're thinking that you're wanting to be part of that, reach out to see if that might be something that we can help you with as well. So a fun conversation, ari, but that's all I've got.
Speaker 1:Many of you already know, james has his own YouTube channel, his own podcast. Of course we're all under the Root umbrella. I have my own podcast, early Retirement, and then, of course, my name on YouTube as well, and then we have the Root Talks, which is where you guys get to hear this. This is, of course, on both of our podcast platforms and then our root financial YouTube channel. Some of you have sent us emails kindly saying hey, how do I find the video?
Speaker 1:I looked up on YouTube but it's not that easy. If you go to either James or my channel and you're just on our main YouTube channel, if you scroll to the very bottom, you'll see a featured channels section and you don't need to become a web developer or anything to find where this is. Right at the bottom you see a little icon with the root logo. If you click that, that will take you and you can see more about our advisors, previous episodes, and then big announcement is coming next week, which we've alluded to, but this is that final episode of that kind of three-part series to learn more about root. If you guys really like this, please send james myself an email. Let know we really love hearing what resonates with you guys. You can, of course, also find James on Instagram at James Canole, and then myself on Instagram at Early Retirement Ari. We try to post more personal type content when possible there, and that's all.
Speaker 2:I got Awesome. Thank you, ari, thank you everyone for listening and we will see you next week for an exciting announcement. See you guys. Bye everyone. The information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and are not guaranteed. Any mention of rates of return are historical and illustrative in nature and are not a guarantee of future returns. Past performance does not guarantee future performance.
Speaker 1:Viewers are encouraged to seek advice from a qualified tax, legal or investment advisor professional to determine whether any information presented may be suitable for their specific situation.
Speaker 2:Hey everyone, it's me again for the disclaimer. Please be smart about this. Before doing anything, please be sure to consult with your tax planner or financial planner. Nothing in this podcast should be construed as investment, tax, legal or other financial advice. It is for informational purposes only podcast. If you want to see how Root Financial can help you implement the techniques I discussed in this podcast, then go to rootfinancialpartnerscom and click start here, where you can schedule a call with one of our advisors. We work with clients all over the country and we love the opportunity to speak with you about your goals and how we might be able to help. And please remember, nothing we discuss in this podcast is intended to serve as advice. You should always consult a financial, legal or tax professional who's familiar with your unique circumstances before making any financial decisions.
