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HomeInvestingTranscript: Peter Mallouk, Creative Planning

Transcript: Peter Mallouk, Creative Planning


 

 

The transcript from this week’s, MiB: Peter Mallouk, Creative Planning CEO, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, SpotifyYouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

 

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Bloomberg Audio Studios, podcasts, radio News. This is Masters in business with Barry Ritholtz on Bloomberg Radio.

Barry Ritholtz: This week on the podcast, I have an extra special guest. What can I say about Peter Mallouk? He began as an attorney working on things like taxes and, and trusts in estates and consulting for various RIA firms when he became an RIA and eventually bought creative planning when it had, you know, a handful of, of clients and, you know, 30, $35 million. He has since built Creative Planning into one of the nation’s largest RIAs and an absolute powerhouse running over $300 billion. Peter is the guy I look to when I wanna learn things about how to build a firm, how to grow organically, how to think about acquisitions, how to structure your company, really to become an enterprise as opposed to merely being a business. Peter is also the author of two really interesting books, the Five Mistakes Every Investor Makes, and How to Avoid Them. And his latest book is Money Simplified, whether you’re an RIA or an Entrepreneur, whether you’re interested in finding out about who should manage your money and, and what you should look at when you talk to creative planning. I thought this conversation was absolutely fascinating, and I think you will also, with no further ado, my discussion with Creative Plannings, Peter Mallouk.

Peter Mallouk: Hey, it’s great to be back, Barry.

Barry Ritholtz: So I didn’t mean to imply that the other books were interesting, I just, those are the two most recent books I wanted to emphasize. But let’s talk a little bit about your background
and your career, which is so interesting. You get a JD MBA from the University of Kansas in 1996. That’s an interesting combination. What was the plan for your career with that combo?

Peter Mallouk: Oh, so here was the, the brilliant plan I had had been an undergrad at KU for quite a while, and I was having an incredible time. My brothers were, you know, three, four years younger than me, so they were coming in when I was a senior. I didn’t wanna leave. And so I thought I’ll just stay and get a, get a, master’s degree. And then I learned that KU was launching this combination thing instead of doing law degree for three years and MBA for two, you could combine them and do it in four, and if you went in the summers, you could do it in three. And so I signed up for it with no plan other than to stay at KU a little, a

Barry Ritholtz: Little bit longer, don’t wanna leave, didn’t wanna leave?

Peter Mallouk: Didn’t wanna leave that, that was the plan. I’m having fun.

Barry Ritholtz:  Your siblings went to the same school at the same time? Yeah. So KU is a big joint. What was that like?

Peter Mallouk: It was a blast. I mean, it’s, it’s a, it’s a really, really fun town. My my oldest son just graduated from there. My, my youngest two are going there next year, so I get to relive it, you
know, through them a little bit. And it’s, it’s, and, and many things have changed, but a lot of things are exactly the same. That’s one of the, one of the reasons I think a lot of people like going back to the schools that they, that they graduated from.

Barry Ritholtz: So long before you went to ku, creative Planning was formed in Kansas. That was back in 1983. What led you to acquire the company in 2004? You were an employee at the time, weren’t you?

Peter Mallouk:  I was. So I, I had started out, you know, with an accidental journey to becoming an advisor, and I really found myself as an advisor to advisors. So I would go from one brokerage house to another and one independent advisor to another from morning till, you know, the day was over. And I would do legal work for their clients, or give tax advice or do planning or investments. And at, at some point, the people that were running the fi, financial planning department for creative planning, which was a sister company to an insurance company, there were three guys that were selling disability insurance to physicians in Kansas City. Huh. One of ’em passed away at a young age. One became disabled at a young age, and the, the people that were running the financial planning arm had left. And the owner of that firm, this incredible guy, had brought me in to handle the planning and investments for creative planning. So while I was doing all this work for other advisors, I was also managing, you know, their 30 or 40 clients that they had at the time too. And that’s where, you know, from 98 to oh four, I got this sense of, hey, all day, every day I’m doing little pieces for different people. What if there was a firm that did all of this in one place, One quarterback to oversee everything

Barry Ritholtz: ’04, you do the acquisition. You’re working as an attorney for an advisory firm. It’s kind of hard to write a big check at that point. How did this process go about for you acquiring?

Peter Mallouk: Well, I mean, it was, it was managing a very, very small amount of money. So there was no big check to, there was no big check to be written, or I wouldn’t have been able to buy it. And he was, you know, very great. I mean, we’re talking like, you know, six figure check, right. Spread out over, you know, 60 months. So it was not a, this was not a big operation at the time.

Barry Ritholtz: $34 million, not a lot of money. That’s right. And, and now it’s up.
What is that a 1000X? You’re, you’re over 300 billion. Let’s talk about how you got there.

For the first, what is that, 15 years? You did no acquisitions. So strictly organically grew from 34 million to 42 billion. That is a giant a 100X set of gains. Yeah. How do you grow a company organically that quickly?

Peter Mallouk: I think we were ahead of the game in a lot of things that now a lot of firms have started to do. And I think, like we were doing financial planning without a separate fee. We were passive on the equity side. We never used hedge funds, but we used private equity, you know, private lending, you know, very early on for an RIA, we were doing legal tax investments, trust services, planning, all under one roof. That was definitely revolutionary at the time. You know, there, the other firms, you know, that, you know, 10 years, 15 years later, started to add those things. We had a very big head start and the market really responded to those things. Like if you look here 20 years later, where did the market go on the equity side? It went from active to passive. Well, we were there in the beginning on the private side, where has it gone from hedge funds to private investments. We were there very early. It used to charge separately for a planning fee. Now it’s more the way creative planning did it. And this I idea of adding other services in one place, the market’s moving there too. So I think we were just ahead on all of those things. We had a, a big advantage in that regard. I think when people are looking for an advisor, they, they like to see, you know, but usually two things, I think, one, they wanna see that you know, what you’re doing and, and they’re, how, it’s very hard to figure out that somebody knows what they’re doing. But you, they can look at creative and go, well, creative’s been doing this a very, very long time. Right? And if they can go talk to a hundred advisors, none of them would’ve been doing what we’re doing back then. Right?

And so they think, they just know, Hey, we’ve been doing it longer and we’ve got probably more people, you know, doing these services, more specialties, more people with those designations. We’re now divided out into working with ultra affluent people and the mass affluent and having different teams that serve all of these. And I think an investor, a a a prospective client can figure that out in pretty short order. You know? And my, my son and I were walking here to the studio. We were trying to figure out, you know, where to eat. We didn’t have any time. We’re gonna have to eat and walk, right? So here in New York City, we, and we, we got in late. We wanted to make it on time here as, as close as we could. So we, what did we do? We stopped at a food truck, a bunch of food trucks. But there was one food truck that said, big long line, voted but best. Whatever trip advised all at, that’s the one we stopped at, right. Because it feels like there’s some social proof there that is food trucks, food’s probably better than other ones. And sure enough, my son was like, if I was in Kansas City, I would eat this every day, you know, for lunch. I think when you look at an advisor, it, you know, we’re, we are both in the professions, so it seems, well, I mean, does it that big a deal to be doing it a long time? Well, I mean, if you get yourself outta the profession, profession, you need a medical condition, right? And you’re looking for a doctor, you would like the doctor that’s been doing it for a few decades with an enormous team that’s invested in all this technology, it’s probably already made the mistakes they’re gonna make that if something weird shows up, they’ve probably seen it before. That is creative planning. And so the growth, it, it compounds because the longer you’ve been doing it, the more that credibility you have.

Barry Ritholtz: So you mentioned you have all these different teams and all these different people. How do you maintain the corporate culture when you scale up a hundred x? Like that’s a real challenge. Yeah. How do you keep all the horses pulling the sleigh in the same direction?

Peter Mallouk: Why take this incredibly seriously? Because, you know, in, in this business,
all you really have is what’s in, in, in, in people’s brains and in their hearts, right? You gotta have people that know what they’re doing and they care about people, right? Because this isn’t like, we’re not a hedge fund, we’re not a mutual fund. Nothing wrong with those things, but we’re dealing with actual human beings. You know, whether a creative, whether you’re a CPA or an attorney, or a planner or a wealth manager, whatever, you’re sitting across the table from somebody. You, you have to have that kind of consultative nature about you, or you’re not gonna be successful, certainly not be able to do right. By the client. And so I look at culture a couple things. One, it’s who you let in, in the first place, right? So when I’m interviewing, it’s not just who I want in, it’s who do I want to keep out? So I’m always the last stop in an interview. Mine’s always just a few minutes.

Barry Ritholtz: Today, with even today, how many do you guys have? Over a thousand employees, Right?

Peter Mallouk: 2,400. Yeah.

Barry Ritholtz:  So every one of them, you gave the stamp of approval before they came in?

Peter Mallouk: Yeah. And I’ll block quite, quite a few, really. Now they’re background check before they get to me. Somebody’s already, somebody’s already said, Hey, I like them for my department. They know what they’re doing and all that. We’re not, you know, we’re not perfect, but
there’s a lot of screens in here. But what I’m just looking for is, you know, every now and then you have a leader. They’re just desperate to fill a role, right. And you really have to, you, you wanna avoid that desperate hire where they bring that jerk in. Right? Right. Because, you know, I was talking to somebody the other day about, are most people good or most people bad? And we were talking about, well, yeah, think about all the violent crime and assaults and all this stuff. And the reality is most people are good, but one bad person causes so much damage. Right? Right. We had a, someone that became a client because someone was stealing from them. An employee was stealing from ’em. Well, turns out they were stealing from four other businesses too. Really? You know what I mean? Like, so, but that’s normal, right? Someone who commits sexual assault, it’s a very tiny group of people that commit sexual assaults. The problem is the average person does it over and over and over again.

Barry Ritholtz: It’s Not a one off. Right?

Peter Mallouk: You create disproportionate victims. Well, I, I look at it like weeds in a garden. You get that one person in your firm and they’re a little bit of a jerk, or they’re overly self- serving, or they can turn the culture very, very fast and cause a lot of distraction. I think the biggest successes I’ve had in my career are who I’ve hired. And the biggest failures I’ve had in my career are, are who I’ve hired. And so I think, like you look at the social curve part of it’s attracting the right talent, but getting that, you know, sociopath or that kind of like really narcissistic type personality, keeping that person outta our firm, I think that’s step one in the culture. Step two is if you make a mistake and we make mistakes, correct it fast. I’m really bad at this, by the way, Barry. I’m like, really?

Barry Ritholtz: The hardest thing to do.

Peter Mallouk:  Yeah. We all know the expression. Hire slowly fire fast. I just, yeah. But it’s very hard. It’s much harder to do than the sounds. Yeah. And what,

Barry Ritholtz: Peter Mallouk: What’s changed my thinking on this is I used to just drag it out and drag it
out and drag it out. And this, you know, woman in our firm who started with me early on, she, you
know, came to me once. She said like, Hey, you think you’re doing this person a favor? What you’re
really doing is you’re punishing the rest of us. And that just changed my thinking about it overnight. Like
now I feel like you’re sending a message to the rest of the firm of what you’ll tolerate. Right? Whether
it’s incompetence or ill will or whatever. So getting people out, you know, quickly is another very big
piece of it. And then the other part is, who do you make a leader? You can’t just make the leader the
person who was really good at something, right? Like, you can’t say, say, okay, you’re really good at
taxes, I’m gonna make you the head of the tax group. Or you’re really, you
00:11:35 [Speaker Changed] Good at, it’s a different set of skills. Yeah.
00:11:36 [Speaker Changed] You, you really need somebody who embodies the culture where, you
know, someone was just asking us, we do this thing called ask me anything at creative planning where
every six months separate from other things we do, there’s just an hour. People can ask me whatever
they want. And somebody said, well, what do you, you know, what’s the message you want your leaders
to give? And I said, I want my leader to be the message, right? If you have to ask what the, the leaders
should just personify what they want, what, what the example is of what, what it’s supposed to be.
That’s the type of person. You gotta do all those things intentionally. Culture’s very fragile. I think we’ve
been great at it. And I think a big part of it is the, we’ve got the right leaders in place.
00:12:12 [Speaker Changed] Let, let’s also talk about your headquarters. You’re in Overland Park,
Kansas. The typical investment firm seems to be east coast or West coast. What are the advantages of
being located in Kansas? See,
00:12:25 [Speaker Changed] This is a happy accident too. Kinda like how I wound up with my majors or
wound up in the profession is just, I was born and raised in Kansas City and just was never ambitious
enough to go do anything else. You know, my one of my brothers moved to Dallas and one moved to LA
and they’re both enormously, you know, successful. All my aunts and uncles moved to different cities.
But I graduated, went back to Kansas City, got a job, and next thing I knew I was running creative
planning. And by the time I even thought about where I was located, creative planning had been, you
know, too successful to consider anything else. Once I tried to get my family to move 20 blocks and my
kids started, you know, screaming and ran upstairs. So it was clear, nothing, you know, nothing was
gonna happen. So, but it’s been absolutely amazing because to to this day in my life, I have not done a
coast to coast flight. I mean, I, I travel every week and it’s very easy to get around the country. If you
are, are,
00:13:14 [Speaker Changed] You’re never more than two and a half hours away from anywhere, right?
00:13:17 [Speaker Changed] Yeah. Everything’s pretty, everything’s pretty close. Hawaii
00:13:18 [Speaker Changed] Is probably
00:13:19 [Speaker Changed] Your first Yeah. Yeah. I mean, continental us, right? So everything’s really
easy to get to. So I need to visit an office, see, see a team, or, or give a, a presentation or see a client. I,
you know, I can do it. And I also think that there is something to be said for, and I think it sounds cliche,
but it is not just Thiswe Midwest ethics, Midwest work ethic and, and kind of the attitude, this bias
towards integrity. I found it very, very easy to hire very high quality people. And so many of our, our
firm’s partners are based in Kansas City too.
00:13:50 [Speaker Changed] We, we call it Midwest. Nice. Yes. Yeah. Which it really is. Yeah. We have
family in Chicago every time we’re there every year for Thanksgiving. Every time we’re local. It’s like
everybody here is just so delightful.
00:14:02 [Speaker Changed] Right? That’s right.
00:14:02 [Speaker Changed] They’re just so pleasant. I guess it’s ’cause they’re not in a rush and the real
estate isn’t as expensive, so people are less stressed that that’s what I usually chalk it up to. Yeah. But
Midwest nice is really a thing.
00:14:14 [Speaker Changed] It’s really a thing. Yeah. There’s a, there’s a lot of reasons, but it’s, it’s a real
thing that I appreciate more and more every year that goes by.
00:14:20 [Speaker Changed] Let’s talk a little bit about the growth at creative planning. It was organic for
the first 15 years, and then in 2019 you did a few acquisitions. First off, what led you to the decision to
say, Hey, we’ve gone as far as we think we can, or organically, let’s take advantage of all this cheap
capital around and start doing acquisitions.
00:14:43 [Speaker Changed] So really for us, I mean, I had never occurred to me to even do an
acquisition. We were all, and from the very first month, growing faster, as fast as we could possibly
handle, it was like, it was just moving so quickly. We’ve always been hire every quarter in the history of
creative planning has been positive net inflows every quarter in the history of creative we’ve been
hiring, right? And we’re just growing, growing, growing, growing. But you look at, even over that period,
Forbes had done a ranking of the, the fastest growing firms in the United States. And we were number
one on that list. And that was 10 years in. It was the, over the 10 year period, even then, if you went to
an average American city and visited one of our offices, we probably didn’t have a physical office. We
probably had one or two advisors.
00:15:25 And in this, in that particular city, we might have managed, you know, $800 million. Right? So it
was clear to me that I could do this till I was 110. And I was not going to be able to build a national
independent firm. I might have had the biggest independent RIA, you know, at, at doing that, that pace.
I might’ve, we would’ve continued to be successful. But we had sat around a few of us and said, well,
what do we wanna do? And we said, we have this opportunity to set the standard of what a, a client
should receive from an independent wealth manager. And we looked at our competitors of who else we
thought might be that standard. And we thought, you know, we, you know, we’re proud of what we’re
doing. We thought, hey, this is the right way to do it. This is the right investment approach.
00:16:03 This is the right wealth management approach. We have this opportunity to do this. Let’s do it.
Right. And so along the way we, you know, made one acquisition very much by accident, met a father
and son that turned out to be wonderful. But what we’ve observed from them was they grew faster.
When they were with us, their advisors all stayed and were very happy. Their clients got more services,
they were referred more. So their growth rate went up. And we were like, wait a second. We did all of
this and we doubled our s and and that city was Minneapolis. This is the recipe. And we went back and
started to call all the advisors over the years that had called us and the acquisitions began, but
organically, we’ve actually excluding acquisitions grown more in the last five years than the previous 10.
Wow. So the organic growth has accelerated, but the acquisitions have been a nice way to compliment
it with our goal become being to become more localized to clients, basically in every major market.
00:16:55 [Speaker Changed] So tell us about the 401k acquisition. Did that, was the substantial
purchase, a hundred plus billion dollars in 401k
00:17:03 [Speaker Changed] Assets. That’s right. So, you know, we, on the, on the private wealth side,
we work with the mass affluent, we work with people that have 10 million up. And we, we work with
sent a millionaires and billionaires on the 401k side. We were basically dealing with 401k plans that were
from startup to a hundred or so million. Well, we have 60, 70,000 private clients. Many of them are
CFOs, CEOs of publicly traded companies. And they would say, well, hey, before you talk to my team
about the 401k, how many $1 billion, 401k plans do you have? And I would say, well, well none. And
they’re like, well, there’s no way. You know what I mean? There’s no social proof there. Right. And so
the, what what this acquisition did was they were one of the, the three largest independent 401k
providers in the United States. A lot of publicly traded companies, multi-billion dollar 401k plans with
tens of thousands of participants we bought, purchased that, that group put it in a creative, they’ve
grown quicker because they have more of a wealth management backbone. They’ve got, they’ve got
now financial wellness, financial education. We’re able to manage money, add new investments, add
lower fees. We just have a lot of negotiating power. So we’ve been able to do an enormous amount to
make the offering better. And they’ve grown quicker also from referrals from our advisors. And now
those 401k participants are also learning about creative planning and coming over to the private sites.
This has been a, a home run all the way around for us. Huh.
00:18:20 [Speaker Changed] Sounds like it. You were also very early in the referral program with
Schwab, and you recently announced you were joining the referral program with Fidelity. Both those
companies have notoriously loyal client bases. Yes. How do you get somebody who’s cued with Schwab
or cued with Fidelity to put creative planning first and not think of themselves as a custody client? I
know that sounds odd, but you know exactly what I’m saying. Right.
00:18:52 [Speaker Changed] Well, I mean, I think that the thing about those clients is, I mean, Schwab
and Fidelity are the clear lead leader. I don’t, you know, who’s third? I don’t know who third is, right? td,
00:19:00 [Speaker Changed] Which is now part of sch
00:19:01 [Speaker Changed] Not part I part of Schwab. Right. So these are enormous, incredible, and I
think they’re more than custodians. And I think a lot of people just want custody. They wanna trade on
their own. They’re never come, you know, they’re not gonna come to creative planning. There’s people
that, that, that there are many solutions that Schwab and Fidelity offer their clients. And those people
perfectly satisfied with that. But Schwab and Fidelity give their, their teams this flexibility to say, look, if
the client’s best served with an advi, another advisor go ahead and refer them. And I think that, you
know, Schwab and Fidelity, when they find that to be the case, I think they find creative to be pretty
unique in, in our offering and our, and our expertise. And, and the client also doesn’t lose anything.
Right? They’re still at Schwab. They are Fidelity, they’ve still got the same account number. They still got
their website, they still got their financial consultant in the branch. They just have an advisor advising
them on the account. Now,
00:19:47 [Speaker Changed] True story, when we launched, we were using TD as our custodian. And we
would go on, like you do, we’d go on road trips, we’d meet people, we’d meet existing clients, we’d
meet prospective clients. And after like the 12th time, someone said, Hey, I I, I’m with Schwab there.
That’s when my money is held. Love to hire you as an advisor, but it can only be on, on Schwab. Like you
hear that a dozen times and oh, maybe there’s, maybe we should add Schwab as a custodian. Now we
got a couple of billion dollars with them. But to get to that point, like it was like, wait, it’s a custodian.
Where is this intense loyalty coming from Fidelity and especially Schwab? It, it’s, it’s like nothing else I’ve
ever seen.
00:20:30 [Speaker Changed] Well, there’s an and and I think a very intense feeling of safety and security
and, and the brand. Both those brands carry such, you know, equity with and I, you know what they
should. Yeah. I mean they’ve really delivered, you know,
00:20:43 [Speaker Changed] They’ve been around for, for half a century. That’s right. And done a really
good job. That’s right. Right. Alright. So you mentioned all the various services you offer, but when you
began, that wasn’t the place you started from, right? You were doing some estate planning and other
legal services. Tell us about the timeline that you went through adding these different services. Like
when was that aha moment, Hey, let’s just wrap everything up in one nice package, put a bow on it, and
not have the client have to worry about any financial issues?
00:21:16 [Speaker Changed] Well, I mean, the six years prior to creative planning that I was doing, you
know, legal advice at one place, tax in another planning and investments in another. So day one of
owning creative, that was the first day like that, that first day we were like, okay, we’re doing wills and
trusts, we’re doing financial plans, we’re gonna manage your money. We’ll be the trustee if you need us
to be. Now we was me and one other person, but that’s, that’s what it, we, we were on day one doing
those things. And what’s really changed from then is this the scale, you know, the, the number of
people, I think our tax group might be 700 people and the law group’s well over a hundred people. And
so the breadth and depth of, of expertise and the credentials and experience and all of all of that, the
spec level of specialization is, you know, far beyond my wildest imagination back then. But the offering
itself, the core offering that was day one.
00:22:04 [Speaker Changed] So when did you first add ahead of tax? When did you first add ahead of
trust in estates or insurance? ’cause when two people are doing everything right, you know, it it, it’s
such a challenge. But once you institutionalize it with those hires Yeah. I would imagine everything
began to explode.
00:22:23 [Speaker Changed] Yeah. The first, the first hire was someone to take over, you know, the day-
to-day investing. The second one was someone to take over the, the legal. The next was someone to
take over insurance, then trust, and then lastly, you know, tax. And so that over time, each of those, and
of course when you get the right person, the, the growth explodes. You know,
00:22:42 [Speaker Changed] How, how, how long did that process take before you had those six key
people in place? Hey,
00:22:47 [Speaker Changed] The, in, in a in the first few years we had certain people in place, but they
just weren’t the right people. Right, right. So we had to get, we had to get through to get to the right
leader of each over time. And that, you know, really finishing it all out was only very recently we’ve
added services along the way, but really getting it like stabilized and going about 2009.
00:23:04 [Speaker Changed] And you, you even offer m and a consulting. I mean, tell us about that. You
have that many clients that are thinking about selling a business and need some help. Well, this
00:23:14 [Speaker Changed] Is the advantage of, of scale. So I think about like with, with the number of
clients we have thousands and thousands of them are business owners. So now you’re talking about
consulting. But we also do outsource CFO outsourced hr. We do bill pay payroll, m and a, managed it
401k cybersecurity testing. So that business owner, client, all those things that they care about
protecting and, and that are dollar sign related, they can look to the creative planning business services
unit to help them with that. Yeah. We definitely have enough clients to keep all those groups very, very
busy.
00:23:53 [Speaker Changed] What about one of the hot new things is the concierge services for, for the
ultra high net worth where you’re essentially taking over all of their bill pay. Yeah. And everything from,
you know, buying a car to looking at real estate. How far do you go down that path?
00:24:12 [Speaker Changed] I would say that there’s, you know, it’s, it kinda reminds me of the saying
about family offices. If you’ve seen one family office, you’ve seen one family office, like some family
offices, they’re doing tax for their family. Some are doing just the investments, some are only doing the
private investments. Some are actually doing private investments in house, kinda creating their own
venture capital fund versus buying others. But most of them don’t practice law. Most of ’em don’t
practice tax. They keep track of the real estate, they handle some private investments. The capital calls,
everybody’s different. You know, the line for us is concierge services. I mean, that’s a total nightmare.
We, I remember talking to a great,
00:24:46 [Speaker Changed] Couldn’t agree more,
00:24:47 [Speaker Changed] Oh my God, like this, walk my dog and I need tickets, tickets to this show
and whatever this restaurant, I mean, that’s like a full blown nightmare. Right. And I, I have yet to see
anyone do it successfully. I’ve talked to some outfits that do it for athletes and everyone’s disappointed
all the time. Right. I mean, it’s just, it’s a very, very difficult thing. That’s not something I’m really
interested in doing for us from the family office standpoint. We can handle someone’s real estate. We
can handle their oil and gas, we can handle their bill, pay for them all. We can help ’em as consulting on
their business, but we’re not gonna like, be walking the dog.
00:25:20 [Speaker Changed] Right. The the, the closest I ever get to that is people know I’m a car guy.
Every now and then, someone has a really interesting car. Hey, the dealer offered me X on this. No, no,
no. That’s way too low. So let’s bring it to bring a trailer. We’ll get you up 50 grand. More than that. And
we, I’ve helped people actually sell cars that way and they’ve been thrilled that they’re not getting a low
ball offer from somebody. Yeah. Especially if it’s something kind of interesting. But I don’t wanna
negotiate anybody’s car lease for them. Right.
00:25:49 [Speaker Changed] That sounds hard.
00:25:51 [Speaker Changed] Right. So, so let’s talk a little bit about some of the m and a. You’ve done,
you’ve acquired, is it more than 40 firms
00:25:58 [Speaker Changed] Now? Is that That’s right. Right. Yes.
00:25:59 [Speaker Changed] So we’ve talked a little bit about culture. Let me ask the inverse question.
What’s the non-negotiables when it comes to acquisition? What is like, sorry, we’re not gonna, we’re
not gonna go go beyond this line.
00:26:13 [Speaker Changed] So, you know, I, there’s basically four investment bankers in our space that
control maybe 80, 90% of the deals that are done. And I think they all know that, you know, we’ll start
out with a zoom with another firm. It will usually be short and it will often end short. ’cause there’s not a
connection, it’s not gonna work. What I have found is that the leader of the firm usually is indicative of
the whole firm. Like very rarely do you meet a jerk. And then the firm is a bunch of like wonderful
people. Right? Right. It’s usually like really does emanate, you know, from the leadership. And so I am
very focused on who these people are, what is their attitude, how do they communicate and all of those
things. And so I’m looking for some sort of indication of servant leadership or collaboration, a
consultative nature, kindness, you know, about them.
00:27:01 So I think that’s the type of business we’re, we’re in. Like that consultative business is very
different. You finances is very, very broad, but there’s hedge funds, mutual funds, smma, then there’s
dealing with people, right? Right. So that’s one very, very big part of it. The other part is they have to
want to do what we do, right? We’re not doing deals just to do deals. They have to be planning led, they
have to want provide all of these services to clients. They have to be able to go that extra mile of, okay,
now I’m gonna help you with your legal, and now I’m gonna do this tax question. It’s not just gonna be
talking about investments. They have to adopt our investment philosophy. Right? So they’ve gotta be
following the path that we believe is the absolute best way for a high net worth investor to invest.
00:27:38 So you do that, that eliminates, I mean, 95%, right? And so for us, we’re left with a very small
group, but I think that’s why our acquisitions tend to be so successful, is that small group we’re, we’re
left with, they really, really want to be at creative planning. And we really, really want them to be at
creative planning. And when we see a firm come in, we see their growth on average grow two to 300%
more, 99 to a hundred percent of their clients come over, their teams stay, people are happy. And, and
it’s a, a big win for everybody.
00:28:07 [Speaker Changed] It certainly sounds like it. So the firm has been a little more focused on
creating content lately. Yeah. That’s something I’ve noticed over the past couple of years. You have a
number of different employees posting, sending out market focused content. Tell us a little bit about
how that became part of the firm’s growth strategy and, and brand identity.
00:28:26 [Speaker Changed] You know, well, there’s this very inspiring guy. No, that’s this, that’s built
this brand around. Yeah.
00:28:31 [Speaker Changed] But I stumbled backwards into that. That was never a, it, it, it began as just
an itch. I had a scratch. Right. And then, you know, multiplied from that.
00:28:40 [Speaker Changed] Yeah. You and Josh have been incredible, but I, I, you know, I will say, and
there for the longest time I wrote every single newsletter. Right. And, and I enjoy writing. And I I maybe
did that for the first 17 or 18 years. It’s a
00:28:51 [Speaker Changed] Lot of work, isn’t
00:28:52 [Speaker Changed] It? Yeah. 18 years. Yeah. But it’s, it’s a lot of work and it’s a lot of you as
you, as you, more and more things occupy your attention as a CEO. You’ve gotta decide, well, what,
what am I do and not do? Well, it turns out there’s a lot of people that are smarter than me. Right. At
creative planning. Right.
00:29:04 [Speaker Changed] Or at least better writers then. Yeah,
00:29:06 [Speaker Changed] I’m sure. Somebody, yeah. So, so basically I said I’m gonna focus my
attention on the books, which I, I, I, I really like writing and like the one that just came out and then, and
the podcasts. So I’ve added more podcasts. I do a podcast every month with my friend Jonathan
Clements. I do one every week with my friend Charlie Ello, who he’s an unbelievable,
00:29:24 [Speaker Changed] So Jonathan Clements with the Wall Street Journal for Yes. Like decades.
That’s right. Great, great background. And, and Charlie Ello does some great chart work. Yeah. I see his
stuff on Twitter all the
00:29:33 [Speaker Changed] Time. One of the kings of Twitter. Yeah.
00:29:35 [Speaker Changed] Let’s talk about the most recent book. Money Simplified. First of all, is
money All that Complicated? Why does it need to be simplified? And second, tell us what else the book
is about.
00:29:46 [Speaker Changed] Well, I think it is incredible. I think it’s more complicated than it needs to
be. I think there are a lot of people that don’t understand it desperately wanna understand it better.
And I think there are a lot of people that are too embarrassed to admit they don’t understand it. And so
I wanted to write a book that basically if you were a teenager, you could pick it up and you could grasp
most of the concepts and understand it. If you were a beginner, you would have a book that would
really say, okay, this is really gonna help me. And if you’re a very sophisticated person, but this just isn’t
your day job, then you could get through this book in 30 minutes and go, you know what? I learned four
or five things in here. And so I basically took all what I thought were the top like 50, 60 concepts of
money and said, I’m gonna explain this as simple as possible. And with pictures, you know, as well. And
it’s been, it’s been well received. I’ve been happy with it.
00:30:28 [Speaker Changed] Oh, that’s great. Let’s talk a little bit about the RIA industry. You always
seem to describe it as a messy industry. Explain what you mean by that.
00:30:40 [Speaker Changed] Oh, I think it’s messy on so many different levels because a lot of people,
you, you think broker or RIA, so the, all the independent advisors, their fiduciaries, all their firms are
pretty similar. The firms couldn’t be any more different. There are so many different offerings within the
space, so many different ways of, of, of delivering. And the lines have gotten, you know, very, very
muddied. And also now with so much institutional money in the space, we see a lot of, you know, the
frank and firm concept is, has, has really taken off in a big way too. So I think you see some of the
biggest RIAs are really no different than Morgan Stanley at this point, right? I mean, they have their own
products. They have, they’re duly registered and they’re, they’re making money on commission. I mean,
literally, to me, it may as well be Morgan Stanley.
00:31:20 There just, there’s, there’s no difference from, from what you experienced. And then some
RIAs are just pure money managers, which is, which is wonderful. We need money managers. Some of
them are wealth management firms like creative planning. And some have multiple services, some
don’t. Some are rollups, some aren’t. Some share their brands, some don’t. It’s, it’s very, very messy as
when you come into this space, you really have to spend some time if you’re a client, prospective client,
really trying to understand what you’re looking for and who fits your needs. And if you’re a firm and
you’re looking to sell, I mean, when you look at the, the main buyers, most of them could not be any
more different in their offering.
00:31:57 [Speaker Changed] Right. So you mentioned the phrase Franken firm. I know exactly what you
mean, but why don’t you define what that is to the lay person who may not be so familiar with that
phrase?
00:32:08 [Speaker Changed] Yeah, yeah. So to me, a frank and firm is just, you know, you look, I I look at
creative planning. We spent 15 years building something, you know, from scratch, right? So we built a
very strong tree trunk. We knew what kind of tree it was, right? Had branches. And then when we made
acquisitions, we, we put branches on the tree that fit the tree, right? And the pe people that were
coming knew where they fit on that tree, and we knew where they fit on that tree. But most of the large
RAs are really all acquisitions, right? From a very small, they’re very small firms. They started to do
acquisitions. So if you go to their 50 offices across the country, all 50 of them were acquisitions. So what
do you get? You get 50 different leaders with 50 different ways of doing things. 50 different cultures,
sometimes even different money management approaches. It’s an absolute mess. You know what I
mean? I think that because the industry has grown so much and so many people have made so much
money in this industry that hasn’t really been punished yet. But, you know, in what industries it’s gets
punished eventually all of them, right? Eventually, eventually the Franken firms don’t work out.
Eventually the arms come falling off and the legs come falling off and you just can’t fix ’em when they
get too big.
00:33:13 [Speaker Changed] So, so let’s talk about the genesis of that. Back in the 2010s, not that far ago
in time when the 10 year was yielding one point a half percent, when there was just no yield on any sort
of fixed income, RIAs were thrown off seven, nine, 12% a year. Three, four times a week, I would get a
phone call from some private equity shop. Hey, listen, we want to take a chunk of you. We’re looking to
buy 10%. We’re looking to buy 20%. What’s your profit margin? We see your growth. How much? And
we’re like, we’re, we’re still really growing. We’re not looking to sell anything yet, but call back in 10
years. Right? And, and I wonder, given the fact that we had zero interest rates for so long, I wonder how
much those circumstances and all the private equity cash sloshing around led to the rise of all these
Franken firms.
00:34:05 [Speaker Changed] Well, I think that’s part of it, but I think it’s, it’s a, it’s way beyond that. It’s a
perfect storm of factors that really benefited the RA space. So, so number one, private equity likes to go
where money is moving, right? And we’ve got money going from brokers to independence. There’s, I
00:34:18 [Speaker Changed] Mean, that’s been going off for 15, 20 years,
00:34:20 [Speaker Changed] Right? And, and, and they love massive trends, right? Hey, this is
happening. It’s gonna continue to happen. This is a big thing in my favor. I can make a lot of mistakes
and this will work out. You’ve actually seen that pay off with some private equity firms is they’ve made,
some of them have made monumental mistakes. But even bad RIAs have done well because of that
mega trend. The second mega trend is the transfer of wealth. The massive amount of wealth. You know,
that that’s, that’s moving hands now that’s also betting, been helping the RA space. A third trend is
we’re seeing consolidation in the space. So they like to be in the early innings of consolidation, right? Of
every single industry. If you’ve got dentists consolidating or HVAC company consolidating, you know, if
you’ve got one little company, it’s worth, you know, a certain multiple of earnings.
00:35:03 But if it’s, it’s 10 of those put together, it’s worth more. ’cause the earnings are more
diversified, they’re more reliable. You only need one CFO one HR person, all that stuff. So the RA space
is highly fragmented. So they see a future. If you look at the custodians, it’s not highly fragmented.
There’s two and a few others. Investment banks, there’s two and a few others. Brokerage houses,
there’s a few and then no one else, right? They see the RA spaces gonna go through massive
consolidation and they’re right. And we’re seeing that now. And then you also see this massive trend of
money moving from smaller RIAs to the multi-billion dollar RAs. People going, look, I want to feel safe.
So all of these trends are mega trends. On top of that, you put private equity, loves recurring revenue,
right? I’d rather buy Netflix and Apple where people are paying every month.
00:35:45 And, and that the money management business is a recurring revenue business. And every
aspect of it is, we do taxes. That’s recurring revenue. You have to file your taxes every year. We do bill
pay, that’s recurring revenue if you pay bills every year. So they love that recurring revenue business.
And then there’s an inflation hedge, right? Built, built in just magically. So you have all of these
incredible trends that, look, you and I were not thinking about at all when we started, right? I was just
saying, Hey, how do I do this in a better way to help clients? It was probably a good maybe 12, 13 years
before I got a call from anybody and even knew I had anything with any enterprise value whatsoever. I
just thought, hey, this is a great way to make, you know, make a living. I love what I’m doing all day. I’ve
created this thing that seems to be going over very well. But PE has really flooded this space, particularly
in the last seven or eight years. And they’ve been, right.
00:36:35 [Speaker Changed] So I wanted to come back to PE in a minute, but before we we do that, let’s
talk about the solo practitioners or the small 2, 3, 4, 5 person shop. You know, even with the wave of
consolidation we saw in the 2010s, there’s still tens of thousands of small shops. I’ve heard some folks
say they’re all going away. That seems a little extreme. I’ve heard other people say this space is ripe for
consolidation, mergers, acquisitions, et cetera. How do you see the, either the small firm or the solo
practitioner over the next decade?
00:37:11 [Speaker Changed] Well, I think there are some people in our, in our space that, that love to
say that everyone’s gonna get crushed and go away. And it’s very self-serving
00:37:18 [Speaker Changed] And send us your money.
00:37:19 [Speaker Changed] Yeah. Ex exactly. Come
00:37:21 [Speaker Changed] To us or die.
00:37:21 [Speaker Changed] That’s right. If you don’t sell to us or hire me as your consultant or
whatever, you’re gonna die. It’s, that’s ridiculous. There’s, I think there’s, there’s room. You’re gonna
have to be better though, right? Like, I think that like, you know, 10 years ago, anybody could open a
shop and do whatever that, that world is going away, right? So I think what we’re gonna have is, you’re
gonna have, and my best guess on how this turns out, it’s like the tax world, right? You’re gonna have
one to four mega mega firms. You’ll have 10 to 20 regional firms. You’ll have a thousand smaller firms
that either specialize in equestrian wealth management or dental wealth management, or they cost less
than others. Or it’s a very, very premium service. Or you’re just really, really personable person and
you’re able to maintain a practice that way. But it will be harder.
00:38:09 And I think that it’s gonna be harder and harder to compete with the firm that’s lowering their
fees, providing more services, has access to investments that maybe you can’t get. Maybe can negotiate
something with a third party that you can’t negotiate. But there will be a home. It just that the, the bar
is gonna rise just as with bigger firms. For those big firms to thrive, the bar is gonna have to be higher.
It’s, it’s not gonna just be as simple as buy a bunch of firms and the market goes up. I think that world’s
coming to an end too. Hmm,
00:38:35 [Speaker Changed] Hmm. Real really interesting. So you made the decision to work with a
private equity shop to help fuel your acquisitions. Tell us a little bit about what that experience was like.
00:38:44 [Speaker Changed] Well, I mean, for us, we, we, we’ve never, so General Atlantic is our
minority owner. They own about 17% of creative planning. They’ve been wonderful partners, but we’ve
never used any money from them to do an acquisition. And the reality is, you know, we were the fastest
growing RA in the country, one of the largest RAs in the country. And you know, that’s a lot of eggs in
one person’s basket. Yeah. So the decision was basically made, Hey, we need to institutionalize this
place and we need to reward the people that have come along on this journey. And so we brought in
about 500 employees are now partners. And that’s Oh really?
00:39:15 [Speaker Changed] Because I remember the last time you and I sat down, you were literally a
hundred percent owner. That’s right. There was no outside investors. That’s right. There were no
employees. You are morphing into something a little more employee owned.
00:39:27 [Speaker Changed] Yes.
00:39:27 [Speaker Changed] 500. That’s a big
00:39:28 [Speaker Changed] Number. Yeah. 500 and, and many of them very, very substantively. And
then I, and then you’ve got General Lennick in there. And then we brought in a institutional level, CFO,
we brought in Ernst and Young and, and KPMG wanted to do our audit, wanted to do our tech basically
just said, Hey look, we wanted the regulators to see, look, we’re taking this very seriously. We want our
clients to see we’re taking this very seriously. We’re doing acquisitions. We want somebody we’re
acquiring to see that as well. And it allowed for more easier internal succession in the event that
something happens to me. And so that was, was not motivated at all by using the capital of a third party
to do anything. ’cause they’ve never given us a dollar to do anything. They just bought into the company
and that was it.
00:40:07 [Speaker Changed] Hmm. And any, so it sounds like when you bring in an ENY and A-K-P-M-G
that often is a predecessor step to going public. I don’t get the sense that’s the top of your list No. To
become publicly traded.
00:40:21 [Speaker Changed] No, it’s not. I think that when you, when in our scale, when we’re
negotiating with third parties to bring an investment to a client or to get something for a client, you
know, they, sometimes the partner wants to see some information and that information coming from
one of the big four is a much bigger deal than if it’s coming for like, my buddy across town that does my
taxes. Right. Do you know what I mean? So that, that that’s really, you know, institutionalizing so many
things, made it easier to do a lot of things, give a lot of people a lot of comfort. And that was a very, very
good decision. I have a lot of clients that I personally work with that are CEOs or CFOs of publicly traded
companies. And, and I will never do that. I mean, if I, if I, if we had to go public, you know, for the best
interest of our partners and whatever, we had to go public. I mean, I would do what I had to do, but I
would not be in that seat for, you know, 10 years. I wouldn’t be able to do it. You,
00:41:12 [Speaker Changed] You would’ve big of a sacrifice eventually kick yourself up to chairman.
00:41:15 [Speaker Changed] Yeah. Too big of a sacrifice.
00:41:17 [Speaker Changed] Yeah. I I could certainly see that being a a, a challenge. So given where you
are today, what are you looking at as the next leg of growth for creative planning?
00:41:27 [Speaker Changed] Well, I think today, like we are very strong with the very wealthy and with
the mass affluent. We’ve got an emerging wealth division. We’re strong in the 401k space, and we’re
strong with business owners. We’re working towards getting stronger in the foundation space. And I
think for us now, it’s a question of just getting a bigger locally. Like where most of the places in the
United States where you see a, a major sports team, we’ll have an office, but we’re still relatively small. I
mean, the reality is we’re small, so we only sound big when you compare us to RAs. But the brokerage
houses, you know, Morgan and Merrill and the investment banks, multi-trillion dollars. Yeah. Goldman,
JP Morgan, the custodian, Schwab and Phil, these are trillions and trillion. Yeah. They’re all two to 12
billion, trillion, trillion with a T. Right? So we are a tiny, tiny fraction of that. We employ the same
number of people as the high school close to my office. Right. So in the RIA space, it’s significant, but it’s
not significant enough for the average American to know who creative planning is. And I think that’s our
objective as we want to be the gold standard nationally for the massive affluent and ultra affluent
clients looking for an independent wealth manager.
00:42:33 [Speaker Changed] So you rather famously are known for not going to conferences. I, I have to
ask why is that? I, I really had to twist your arm to get you to go to the conference we did back in 2019.
Yeah. And I know you’re coming to future proof 2024 in, in Huntington Beach in September, but why are
you so down on conferences generally?
00:42:58 [Speaker Changed] So I’ve really, I kinda got this reputation from, I can’t remember, maybe as
investment news or somebody did a story about this and they were asking competitors about me. And it
was, it was kind of like, well, who, who, they didn’t say Peter’s a jerk. It was, but it came across like, well,
Peter’s just like too big of a jerk to go to these conferences or something like that. But really the, the, I
learned very early on from my clients, I’ve learned so much from my clients that, you know, a yes to
something as a no to something else. Right? Right, right, right. So when you’re committing to a
conference, you’re, you’re not usually committing like two days in advance. Right. You’re committing six
months in advance. Right. That’s right. And that’s a big deal if you, if you have kids, like, I don’t like to
commit to things that are far in the future that I cannot move.
00:43:38 Right. And, and so I, I made that, that’s part one of the decision. The other part of the decision
is I think, and look, I know you put on conferences, yours are wonderful, most of them suck. Do you
know what I mean? Like, most of the time you’re going and everyone just really wants to get away from
home and drink and hang out and go for a hike or go golfing or whatever. And I look at that like two days
or three days or four days and go, man, if I spent that 20 or 30 hours, you know, at night with my family
and during the day with cl, actual clients and employees, one-on-one, where am I gonna get more
value? I’m gonna learn more. Not not just serve people more. I’m gonna learn more being present. So I
have that attitude too. Now, my youngest are graduating from high school, so I’m, you know, I think the
last one I agreed to do, I think was with you five years ago. That’s right. And the next one I’m about to do
is, is with your colleague Josh here with, with your org with your group in, in September. Right? In
September.
00:44:29 [Speaker Changed] Right. The, the fun part about that, the whole thing is outdoors. Yeah, I
know.
00:44:32 [Speaker Changed] That looks so, makes it so, that looks cool. And you have, I mean, that’s the
lineup of all lineups, right? Right. That you have. So it’s gonna be very, very interesting one. And it’s
obviously a very different spin than everybody else, but I also know, you know, my kids aren’t gonna be
home. Right. So it’s a much easier, easier thing to do for a couple days.
00:44:47 [Speaker Changed] So the secret is to plan conferences when Peter’s children are otherwise
occupied. Otherwise you get no shot. We, we, we did that very much on purpose. So I know I only have
you for so much time. Before I get to my favorite questions, I ask all my guests, I have to throw you a
curve ball question. You are a minority owner of the Kansas City Royals. I have to ask how that came
about because I know your background with them. How did you end up as a minority owner of a major
league baseball
00:45:19 [Speaker Changed] Team? I mean this, this sounds cliche, but I mean, when I was a little kid, I
would literally listen to them to the radio while I was falling asleep. They used to start at 7:35 PM all the
time. There was none of this three o’clock game and right weekdays or six o’clock game, it was 7 35 and
they played till usually 11. The games were really long. I’d listen to ’em every night. The Royals were
amazing back then. George Brett, Frank White. Oh sure. Willie Wilson playing the Yankees every year in
the playoffs. Huge, huge, huge fan. And then I in high school, I wound up, I talked to my dad and taking
me out there to interview for a job, and I was interviewing. They’re like, what do you wanna do? I’m like,
I wanna be a bat boy for the royals. And the guy just started laughing, right? He’s like, no, I thought you
were interviewing. They’re like, do you wanna sell peanuts or do you wanna sell, you know,
strawberries, what? But you, what are you gonna walk the aisles and sell? It’s like, I don’t wanna do that.
We’re walking out and the guy yells, he goes, Hey, I call the clubhouse and they have a, an opening for a
clubby. I didn’t know what a clubby was, but the clubby, the guy’s like, wa cleans the shine, the shoes for
the players does their laundry. There’s this whole routine.
00:46:13 [Speaker Changed] You literally do their laundry.
00:46:14 [Speaker Changed] Yeah. Literally do it. It, it’s, this is fascinating. I didn’t know delivered
00:46:17 [Speaker Changed] Fried chicken to Kansas City Royal players. Right? Was that during a game
sitting on the bench or,
00:46:23 [Speaker Changed] Yeah, that was, that was Wade Boggs. That was Wade Boggs. I did that for
Very Babe Ruth.
00:46:26 [Speaker Changed] Like,
00:46:26 [Speaker Changed] Yeah, it was, it is crazy. And so, but, but, but I was upset because the clubby
job wasn’t for the Royals, it was for the visiting clubhouse. And I was upset about that. But then I took
the job and it turns out you get to know all the royals, plus you get to meet all the players in the
American League. ’cause you’re playing every team in the American League. Right? And you were
getting tipped every series. So I was making a fortune, I mean, a fortune as a kid, getting all these
autographs, got to know all these players. But the routine before the game is nuts. I mean, they show up
way earlier than most people think, and hours, hours and hours, hours ahead of time. And, and then
they go in and they, you know, hit and field or whatever. Then they come in and they, you, they drop all
their laundry on the floor and they change their, their cleats.
00:47:02 And then they get into their new, you know, jerseys and new cleats, and then they go out and
play the game. And you’re shining their old cleats and washing their old jerseys. And then you’re getting
their lockers organized. Then you’ve got like the third, 80 of the sixth thinning to walk around the
stadium. Then you’re going and getting dinner ready for them and their beers. Then after the game, they
all drink and eat and take their showers, do their interviews, then they leave, and then you wash their
clothes and shine their shoes and organize their lockers and put the food away and drive the ones home
that were, you know, hammered and stayed late. And you take ’em to the Adams Mark Hotel across the
street. So when the Royals came for sale, they were putting it together, a conglomerate in Kansas City.
And I remember when John Sherman, who’s the, the primary owner, he’s is the greatest guy. And he is
like, I’m gonna walk you through. I’m like, John, I don’t, I don’t need you to walk me through this deck.
And he’s, no, no, I’m gonna walk you. I’m like, I’m, I’m a hundred percent in like, I’m just Kansas City.
Through and through Royals, through and through. And I just, it was like a, a, not even a thought about
it.
00:47:55 [Speaker Changed] Alright, so let’s jump to our favorite questions that we ask all our guests.
Yeah. Except I’m gonna modify this because I know some things about you. Okay, good. And two of
these questions won’t work for you, but let’s start with who are your mentors who helped shape your
career?
00:48:11 [Speaker Changed] You know, my, my mentors aren’t, you know, famous people. I really just
early on got to work with somebody who has just had the most positive attitude in the world. And he
was just so gracious with everybody around them. And I saw the impact that that had on, on everybody
around him all the time. You know, with his, with his family, his friends, his colleagues at work. And it
really showed me, you know, how important that piece is to the puzzle. He was not brilliant from a
finance perspective. And then I also worked with someone who was brilliant from a finance perspective,
but was not positive with the people around him. And the combination of the two was really the, the
ultimate, you know, lesson. And I just combine that with my, my, my parents. Kinda that classic
immigrant, you know, work like crazy, love everything about your country all the time no matter what.
00:48:59 And I think just that, the positive attitude, my, my parents, every wedding they left was always
the, the best wedding they’d ever been to. Right. And so I remember I had a girlfriend in, in college and
we were driving home and her parents were like, making fun of something from some wedding. We
were out. I’m like, I never heard anything like it, but that’s like, turns out that’s kind of normal, right? But
I just being around people that were so positive and so negative, so hyper both as the spectrum, I think
that was probably the biggest lesson for me. I don’t think people need to have, people always think they
have to have a mentor that’s like, I get calls all the time. Well, like, you mentor me. Like, and I go, what
does that mean to you? Oh, we go to lunch every month. And you know, you can’t do that with
everybody. Right, right. But yeah, in the world you’re in, we’re in today. I mean, a mentor could be on
Twitter, Twitter’s do you mean
00:49:39 [Speaker Changed] Like, you, you Oh, you can absolutely have remote mentors. It doesn’t, they
don’t have to. Yeah. They don’t even have to know they’re mentoring
00:49:44 [Speaker Changed] You. That’s exactly correct. That’s correctly.
00:49:46 [Speaker Changed] Exactly. And I’ve heard some stories about people who have said, some
people on the show have said, well, these three people have been my mentors. They have no idea about
it. Right. And it’s really, really interesting. So normally I would ask you, what’s keeping you entertained?
What are you reading? What are you streaming? But with you, I want to ask, tell me about the music
shows you’ve been going to. What have you been doing in your evenings in your spare time?
00:50:10 [Speaker Changed] So following you on, on Twitter, I know you’re a big concert guy. It seems
like your genre is like seventies. Is that pretty?
00:50:15 [Speaker Changed] So I have really broad tastes. Do you? Okay. It’s, it’s the Great
00:50:18 [Speaker Changed] Americans. Are you to Sarah McLaughlin too? Like remember? Oh yeah,
yeah,
00:50:20 [Speaker Changed] Yeah. So, so, so, wow, you really, so it’s the Great American songbook. And
everybody from Ella Fitzgerald to Frank Sinatra got it to classic rock to eighties and nineties to jazz, to
classical, to blues. Like even, even hip hop up until, like, my line in the sand is the Beastie Boys Pul Pulse
boutique. That’s kind of where I, that as far
00:50:42 [Speaker Changed] As you go,
00:50:43 [Speaker Changed] I stopped, but, but I’ll listen to pop
00:50:46 [Speaker Changed] Like 1993 or something like that.
00:50:48 [Speaker Changed] I’ll listen to Pop, I’ll listen to Taylor Swift, any of the, the big singers. Yeah.
What’s your musical genre?
00:50:54 [Speaker Changed] So it’s been great having, you know, my, so I used to own music stores in
college and I used to DJ even after College Weddings, everything else. And one of the things you do in a
music store to kill at times is you would just play every album that ever came in. Right. So it became a
very expansive list of things I would be willing to go to. And really, really, the only genre I was not a big
fan of that was Major was country. But my kids have changed that for me. So now I’ve been to Luke
Combs and Mark Wal Morgan Wallen, which I would say were two the best concerts I’ve ever been,
been to.
00:51:20 [Speaker Changed] But those are very new. That’s not, that’s right. That’s
00:51:23 [Speaker Changed] Not, that’s not Hank Williams. That’s not Hank Williams. Right, right.
00:51:26 [Speaker Changed] They’re very interesting. It’s like country rock almost.
00:51:28 [Speaker Changed] Right. David Ko pretty cool, but I mean, most of the old, old stuff is not, is
not for me. You,
00:51:33 [Speaker Changed] You like, so when I think of of Leonard Skynyrd or Allman Brothers or
Marshall Tucker, oh,
00:51:38 [Speaker Changed] I would do all of that. Yeah. Those
00:51:39 [Speaker Changed] Are all rock with the country I influence. That’s right. That works. What
you’re describing is country with a rock influence. Correct.
00:51:45 [Speaker Changed] Yes. Very. Yeah, exactly. Correct. Mean it’s,
00:51:48 [Speaker Changed] I know my genre.
00:51:49 [Speaker Changed] That’s right. I used, I’ve used my daughter as a cover to go to the every
Taylor Swift concert that she’s ever
00:51:53 [Speaker Changed] Oh, you have? Yeah. So my favorite thing I saw on Twitter last week was,
and he told the story on Bloomberg surveillance the other day. Muhammad Arian got all the women and
the swifties in his family in Paris to go see a show. And it was his wife, his daughters, and a bunch of
their friends. And the last minute he said, somebody canceled. So he puts on a pink shirt and he goes
and somebody recognized him, took a photo
00:52:22 [Speaker Changed] Of him and tweeted it. No way.
00:52:23 [Speaker Changed] Oh, that’s hilarious. And it went a little viral, Chris.
00:52:25 [Speaker Changed] I saw, I saw that actually. Hilarious. Yeah. That is hilarious.
00:52:28 [Speaker Changed] How many, how many I had would never have picked you for a swifty.
Although I find her music fun and interesting.
00:52:34 [Speaker Changed] Well, I think, I think she’s, she’s gotta be the best all around artist of this
generation for sure. And I, I, the first time I went and saw her, my daughter was very, very young and it
was her first tour and I remember I was like, oh, there’s this guy on a guitar. He seems pretty interesting.
That’s opening, you know, no one was paying attention. Right.
00:52:51 [Speaker Changed] And it
00:52:51 [Speaker Changed] Was Ed Sheeran. It was, it was hilarious. Yeah. Wow. So and so I gotta see
that. And then I’m, you know, you, you get a little nostalgic as you get older of course. So you start going
to concerts you wouldn’t even go to when these bands were around. True. So I’m doing that all, all the
time too. Like, I’m gonna see Sarah McLaughlin’s on my calendar, the ble the Bleachers who are newer.
Sure. They rolled out a front. I know the bleachers, you know, I’ll go see Lionel Richie soon gonna go see
Bruce Springsteen again. Right. So, you
00:53:17 [Speaker Changed] Know, are you gonna catch the Rolling Stones on this tour?
00:53:19 [Speaker Changed] You know, I’m not a Rolling Stones
00:53:20 [Speaker Changed] Guy, I’m a giant fan and I just don’t want to go to Giant State. Oh.
00:53:24 [Speaker Changed] It’s just, okay. I’d like to, to see them play Sympathy for the Devil and then
go home. Right.
00:53:28 [Speaker Changed] I saw them in Atlantic City on the Steel Wheels tour. It was like an 8,000
seat hall. And it was, it was awesome. But the bands that you might not have seen, I, I have this
discussion with people all the time. Never Hole in Os Fan. Yeah. We saw John Oates in like a tiny, like a
400 seat room. He’s a, like, people who can fill stadiums. They are entertainers and they know how to
entertain. And you’re getting a stadium show with 500 people. That’s
00:53:59 [Speaker Changed] Pretty awesome.
00:54:00 [Speaker Changed] You know, we see Ricky Lee Jones every time she comes through town.
Yeah. Also small venue. She’s amazing. Or Amy Mann or go down the
00:54:07 [Speaker Changed] List. So I love that. So Rio Speedwagon was touring. They’re, they’re doing
like huge, you know, stadium arenas, whatever. And, but they, most of these bands do like their opening
shows, kinda like a quiet practice show. So they’re, the beginning of their tour was in Salina, Kansas, just
like a tiny town five hours away. And they, they did it in this little arena that holds maybe, I don’t know,
2000 people that’s f fantastic, like Tony’s Pizza Arena or something. So I went there, my friends were
like, they’re coming to Kansas. I mean, this is gonna be, I was thinking, this is gonna be awesome, you
know, this. And sure enough, it was just absolutely incredible.
00:54:40 [Speaker Changed] Anytime you get to see a big name
00:54:43 [Speaker Changed] Yes. In a small,
00:54:44 [Speaker Changed] Or even though like, so I, I, I haven’t seen Journey, but I know they’re, but
I’ll tell you who, and again, a lot of this is sixties, seventies, eighties. I’ve seen Steve Miller a couple of
times. Yeah, me too. In small venues. Yeah. He’s amazing. We saw Peter Frampton, I mean, Frampton
Comes Alive was the bestselling live album for like, I don’t know how many decades. It may still, as far as
I know, that may still be the bestselling live album of all time. Seeing him in like, with 3000 people. He
filling, you know, giant. Who else have you seen?
00:55:18 [Speaker Changed] Oh God. I’m just trying to think. I saw The Killers recently. That was one of
my favorites for sure. They were incredible. I just saw last week a band called Cake, which is like a
00:55:31 [Speaker Changed] Reluctantly crouched at the starting line
00:55:33 [Speaker Changed] That’s waiting,
00:55:35 [Speaker Changed] Right. Waiting and pacing. Yes. That’s correct. Yeah. So, so Comfort Eagle.
Yep, that’s right.
00:55:40 [Speaker Changed] They were amazing. I
00:55:42 [Speaker Changed] I have three or four albums of theirs and they’re all spectacular.
00:55:44 [Speaker Changed] That’s right. They’re fantastic.
00:55:45 [Speaker Changed] They’re all spectacular. They’re fantastic. Let me, let me give you the two
that’ll make you jealous. Okay. John Fogarty at Radio City. His his opening tour, by the way, his two sons
are his backup band and they’re all
00:55:57 [Speaker Changed] Great. Oh, that’s cool. So I, I learned how old I was getting when I went to a
couple concerts. I saw a cheap trick who I think Best Rock and Roll song of all time is Surrender I’ll Die on
This Hill. But anyway, they, they were playing and the son, his son was the guitarist. And then the next
week I saw The Eagles and as you know,
00:56:14 [Speaker Changed] Glenn Fre gone. Yeah. Glenn
00:56:15 [Speaker Changed] Frey passed away, but his son replaced him in that concert.
00:56:18 [Speaker Changed] Concert.
00:56:18 [Speaker Changed] Sounds like, sounds exactly like him. Plays the sa same guitar. And then, oh
gosh. Then I saw the Foo Fighters the next week and his daughter comes on and saying, you know, Dave
Gros daughter comes on and sings a song. I told my wife, I’m like, I we are, I am so old. Right. You know,
that I’m now watching like these bands kids play at their
00:56:36 [Speaker Changed] Concert concerts. Right. James Taylor brings his kids out to sing with him.
He is got a son and a daughter I’m seeing, seeing him
00:56:42 [Speaker Changed] In about two months. He’s coming
00:56:43 [Speaker Changed] To Kansas City. His tour is always great. The one that might make you
jealous, I don’t know if this is exactly your genre, and I don’t even know how I got these tickets, but at
the Bowery Ballroom, which is like a basement that holds 200 people. I saw Chrissy Hines in the
Pretenders.
00:56:59 [Speaker Changed] Oh, you know, they’re coming to Kansas City next month. I
00:57:01 [Speaker Changed] The next month. Can I tell you something? Go see the show. Okay. She is
great. The replacement musicians she got, they’re, they’re just, they’re just really, really awesome. And
I, and I’ll see, I’ll see Steely Dan every time they come through town. Like I’m definitely on the verge of,
of you know, the Boomer music. We just saw it. Neil Young at Forest Hills. Oh that’s cool. Outdoors. Oh
that’s cool. Oh, he is just great. What a great show. Yeah, I’m sure. Alright, so, so much with fun with
music. Let’s jump to our last two questions that people seem to really like. Which is, what sort of advice
would you give to a recent college grad interested in a career in either investment management or
becoming an advisor?
00:57:44 [Speaker Changed] So I would tell them, pick your starting place very carefully. Pick the firm
that you’re gonna go to outta the beginning. ’cause that can really start to dictate your destiny. Right?
Do you wanna be the brokerage side? Do you wanna be on the independent side? Do you enjoy sales?
Do you enjoy advising? Really try to get to the right place as close to the right role as possible. If you’re
given a choice, like, Hey, you can make X thousand dollars and be in this group, or you can make more
and be in that group. Choose the group. That is more where you want to be in the long run. I’ve found
that proximity is a very big indicator of success. You know who you’re around. Are you in the right
company? Are you around the right people? If you’re at the right company with the right people and you
do the right things, great things are gonna happen. But you can do the right thing, be in the wrong
company or not around the right people, it’s not gonna work. So those first decisions are really
important. Huh. Really,
00:58:31 [Speaker Changed] Really interesting. And our final question, what do you know about the
world of investment management, financial planning, building a firm, entrepreneurship today that might
have been helpful 25, 30 years ago when you were first getting started?
00:58:46 [Speaker Changed] Well, I think when I, you know, when we started doing what we were doing
20 years ago, I, we were doing, I, I set it up that I wanna do all these things in one place now, this
investment philosophy, because I thought it was the right thing to do for the client. I thought it was fun
to give advice that way, that people really benefited from it got a lot of positive feedback, but I didn’t
really think about it being an enterprise. That, that became accidental. And really the effort to go, Hey,
this isn’t enterprise. We could really, you know, grow this in that strategic way. Probably came about 10
years later. You know, if I had a time machine, I would’ve made that light bulb go off on day one and
00:59:20 [Speaker Changed] Accelerated a lot of things. And, and I’m gonna give you credit ’cause you
are the person who first put that idea in my head a couple of years ago that you’re not building a firm,
you’re building an enterprise. And that’s a big difference. Yes. Thank you Peter, for being so generous
with your time. We have been speaking with Peter Malu, CEO, and President of Creative Planning. If you
enjoy this conversation, well check out any of the previous 500 or so we’ve done over the past 10 years.
You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcasts.
And check out at the Money my new podcast, short 10 minute conversations with experts about topics
that affect you and your money, earning it, spending it, and most importantly, investing it at the money
in the Masters in Business podcast feed. I would be remiss if I did not thank the crack team that helps
put these conversations together each week. Sarah Livesey is my audio engineer. Atika Val is my project
manager. Anna Luke is my producer. The head of podcasts at Bloomberg is Sage Bauman. Sean Russo is
my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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