JC: Hi I’m Julie Cooling, Founder of RIA Channel and contributor with Forbes. I’m here with Dale Yahnke, Founding Partner of Dowling & Yahnke, LLC.
Congratulations, you made our Forbes “Top 100 Wealth Management Firms” for 2016 with $3.5 billion in assets under management and $2.2 billion in asset growth over the period of 10 years. Congratulations!
So you are number 25 on our list. Way up there. We would love to know a little bit about how you grow and how you work with clients.
DY: We grow organically. It’s all been organic. I’ve always had a philosophy that we try to hire the smartest people we can and the most passionate people about the business. If you hire great people, great things will happen. So, we really concentrate on giving back to the community, being involved in the community and building a brand. If I have done anything successfully, I’ve hired some really smart people. I think we have been successful at bringing in great folks, and that is what causes the firm to grow. We do great work for our clients. We are passionate about it. We love it.
JC: In terms of hiring people, how do you go about finding the right folks on service and on the investment side?
DY: I probably spend a disproportionate amount of my time recruiting. And so, I try to talk to people in every walk of life; not just our industry. I have found some of our best employees in other industries that I think are super talented. We can teach them if they are passionate about it. We have always hired for talent over bringing assets in or having some experience in the industry. So, I think we have an exceptional group of people that I work with.
JC: How many people work with you today?
DY: We have 45 people in the office. We have 6 partners and 12 direct client-facing people. We put an emphasis on education. I think we have about 10 CFAs, 14 CFPs, 2 CPAs, and master’s degrees from all the top schools. But it’s not just the resume, they have to have heart and passion for the business.
JC: Wonderful! In terms of trends you are seeing from your clients; most of your clients are high-net worth individuals and small companies?
DY: Yes. Our average client is about $3 million. We have a lot of small business owners and retirees. I think people are getting smarter in this industry and they are asking better questions. They are questioning, “If I am going to pay you, what am I going to get in returns?” So, we have to continually work on our value proposition. Frankly, we have to be better than our competition. So, we work every day at being great at what we do.
JC: In terms of investing, are you investing in ETFs, passive or actively managed mutual funds?
DY: When we started 26 years ago, we were odd balls: We were fiduciaries. We used an independent custodian, and we followed a passive strategy. So, that made us different back then. Today, there are a lot of people coming around saying this is probably a better way of doing things. So, we have been passive. We dono-load mutual funds, we use ETFs, and we do individual securities. We actually build a large cap portfolio, sector neutral, buying individual securities. It helps us tax manage and not a lot of firms deal in individual securities. We do.
JC: What about alternatives? No alternatives?
DY: I have not been a big fan of alternatives. I think in theory, if you can hedge a portfolio, then that makes sense. But, when you look at the fees associated with them, their lack of tax efficiency, and the core investments really come back to the cores of debt and equity or real estate, I think they tend to be expensive things that don’t tend to deliver on the promise.
JC: What’s next for you guys?
DY: Our goal is to continually grow. I think there is a vibrancy when you have a firm that grows. We look to continue to recruit great young people, and if we grow we give them great opportunities. There is also a lot of scale in this business. Our goal is to continue to be the dominant firm in our market. I think if a firm is not growing, its dying. So we continue to want to grow and continue to expand our offering to our clients.
JC: Well it’s definitely working. Congratulations and thanks for being with us today.
DY: I appreciate it. Thanks, Julie.