Family Business Audiocast | Episode 75 | Shirl Penney

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R. Adam Smith: Welcome to the Family Business Audiocast on LinkedIn. I am R. Adam Smith, creator of this Audiocast series. As an entrepreneur, investor, founder, investment banker and board leader the last 25 years, I'm fortunate for my many experiences within the family firm industry. A brief comment on why I created this broadcast. Private companies are a passion of mine. Having grown up in a family of entrepreneurs and having engaged for two decades in deals, strategic transformations, investments and boards with an array of fascinating family enterprises, family firms and family offices, I founded this series to offer a useful platform for listeners to hear from veterans, academics and leaders in the vast family firm ecosystem.

Whether you're a family business owner, building, running or advising a family office, or just expanding your family office activities, I hope these conversations are useful and enlightening. Now it's time to turn our attention to our accomplished guest on today's episode. This is R. Adam Smith, founder of Family Enterprise Holdings. Thank you for tuning in to this episode of the Family Business Audiocast. I'm here with Shirl Penney, someone I've known for a long time and is CEO and founder of Dynasty Financial Partners.

Shirl, it's great to have you today on the podcast.

Shirl Penney: Thank you. Thank you very much for having me. I'm very excited about the conversation. Thank you so much.

R. Adam Smith: Shirl has a quote I like. He says no one builds a dynasty to flip it. Of course, Dynasty is the name of his company and I love that he has built his firm based on genuine alignment between advisors and clients and also a company where the families of his team are there to work as a team, collectively, holistically. And he's done a great job building the firm. Just give you a sense of him and the firm briefly, then we can kick in.

Dynasty now supports over 700 advisors and over 125 billion in assets under administration. And Shirl told the interviewer recently that the platform is approaching more than that, around 140 billion and has a shot of significant growth in the coming months. And that's some pretty significant growth. I've known Shirl since the beginning of the firm and often this type of growth can really break cultures. But Dynasty is quite an exception to that rule and has a very, very cohesive firm.

So we'll talk about that today on the podcast. At the age of 32, in the middle of the 2008 financial crisis, Shirl walked away from a fast rising career. He was at Citibank in the private wealth management business and he started Dynasty out of his home, betting that advisors would ultimately leave the traditional model if someone built them a better one, free of the conflicts that we see often baked into the Wall Street model. And now, 15 years later, Dynasty is a thriving organization, something to really respect and be proud of, including the culture of the firm. The majority of these firms do not have equity infused throughout the organization, but Dynasty is quite the contrary and reflects the philosophy that Shirl has built into the company.

So excited to talk about that today with him. And also the fact that Dynasty is one of the leading organizations that really adds value to the family office, to the RIA, to the wealth management community, in addition to the other implications and impact on the industry ecosystem that comes from its scale in the industry. Shirl, you want to tell us a little bit about Dynasty from your own words and kind of your story and then we'll jump in.

Shirl Penney: Sure. Thank you, Adam. And again, appreciate the opportunity to be here with you. As you said, you know, I started my career on Wall Street. I think maybe, you know, for the listeners, it's worth 30 seconds to say before I found my way to Wall Street, I grew up in a small fishing village in Eastport, Maine, where my graduating class was 23 people. I was actually homeless when I was 11, 12 and 13, raised by my step grandfather.

But I had a dream of making my way off to Wall Street and building a career in finance. So I bought a suit for $13 at the Salvation Army. Unfortunately, my granddad passed away right before I graduated from Bates College up in Maine. And I rode a bus 16 hours to New York where I didn't know anyone, but was armed with, you know, a strong work ethic and a desire to jump into an industry that I was fascinated by, the world of finance and wealth management. I got hired at Citigroup, as you said, and was able to work my way up.

I ran the private wealth management business there, ran the corporate executive programs for the business, ran global sales, but decided to leave in early 2008 in front of the financial crisis to build Dynasty Financial Partners. And what Dynasty is, is a business that has become the premier operating system for independent advisors. And as you alluded to, you know, we cover over 700 advisors, over 60 RIAs, approaching 140 billion. We do have quite a number of deals that we're onboarding. The game plan is in the next five or six years to take it to a trillion dollars.

So very bold ambition in that way. But you know, to your point around the name and launching Dynasty, the co-namer, if you will, Adam, I don't know if I told you this story. It was Mike Repetto, and many of your listeners will know Mike as a fellow entrepreneur who founded Vitamin Water and BODYARMOR. Just a great, great friend. And we were sitting on my porch in Saratoga Springs, upstate New York thinking about the name for the business. And we both were thinking about a name that means winning consistently over time.

Built to last, multi generational, sustained excellence, hard to win, even harder to keep winning. And we both kind of looked at each other and said dynasty. And then to your question, you know, he looked at me later that evening and said, you know, if you name your company Dynasty, you better be here in several decades or you look like an idiot. And that was over 16 years ago since we launched the business. Many, and you know this well, Adam, many of the entrepreneurs that were in my generation, if you will, launching businesses in the ecosystem around that time, most all of them are gone. We're one of the few businesses that are still thriving.

We have not sold the business, have not given up control in the capital stack, which I'm sure we'll talk about, is required a very deliberate approach to how we built that business over time. Our business, as I said, is largely a wealth technology business. We run all the middle and back office functions for independent advisors to free up their time to be with their clients and to build a better business. We also have an investment platform. So of the 140 billion that's on our technology, a little over 100 billion of that gets implemented from an investment perspective across traditional and alternatives and private investments and the like on our investment platform.

Our third business is we ourselves have a capital business and an investment bank. So we do make strategically aligned investments up to 20% in the RIAs that we support. But again, these are just balance sheet aligned investments, designed to have the majority of the equity sit with the advisors so that they can focus on growing the business and making sure that they and their employees are cared for from an equity standpoint over time. And then we have a leads business called Dynasty Connect which is really about connecting individuals who might be looking for a new advisor or looking for an independent advisor, someone who's going to be a fiduciary based advisor to help them and their family. So those are the four different verticals.

You can kind of see some of the synergy amongst the four of them. But as you said, all designed in a way to allow an entrepreneur, an independent advisor to ultimately build a better business, take better care of their clients by having a partner that takes a lot of the things off their plate that probably for most advisors isn't necessarily the best utilization of their time.

R. Adam Smith: It's quite an ecosystem. It's great to see the evolution of that. I think you've made some significant decisions to grow, let's say horizontally, to bring more value to the RIA and the wealth manager ecosystem.

That's quite a significant and fragmented industry. And so I think that's something to be really proud of, that you're creating scale and a brand and cohesiveness and a range of services to make it easier for the RIAs to exist, to live, to grow and to take off some of the frustrations on the operational administrative side. And now you have a chance to push 200 billion of assets under administration, is really quite significant. And so back to the culture. Maybe just kind of bridge what you saw at Smith Barney and Citigroup and kind of what you see in the industry and how you and your team have built a cohesive positive culture within the firm.

And of course that relates to your desire to build a dynasty, but also to create a positive working environment.

Shirl Penney: Yeah, no, absolutely. I think not just specific to Smith Barney and Citigroup, but going back a number of decades, you started to see a little bit of the misalignment come into play when a lot of the great legacy Wall Street brands started to go public. And I'm speaking really primarily from a wealth management perspective, although I think you could argue in some of the other business verticals that the same thing applies. But when ultimately advisors that are covering the end client work for management, right?

Who works for the board, who works for the shareholder, what ends up happening over time, as a way to drive revenue and profitability, you start to hear language coming into the business like cross selling or multi product households. You start to see leadership of a lot of these organizations focus on how can we maximize what they refer to as non compensatory revenue, meaning revenue that we can generate off of a client's account without having to pay the advisor who brought the relationship to us. And that's spreads on cash and different capital market related revenue lending, how they leverage the balance sheet and the like. That's really like maximizing lifetime value of the customer as opposed to focusing on the needs of the customer.

R. Adam Smith: Yeah, yes, very much so. It's a different way of defining quote unquote success. Right. Versus a fiduciary based advisor, who oftentimes is signing a fiduciary agreement, independent advisor, to say I'm legally obligated to put your best interest first.

Shirl Penney: They're defining success as, you know, obviously client retention success over time in a very transparent way of helping the client achieve their personal and financial goals and objectives. They're paid one way, which is through an advisory fee that they receive from the client. And there's just no connectivity to either custodian related economics or product manufacturing. And what's happened because ultimately who controls the relationships inside of the major public company brokerage firms are the outside investors. They're dictating how they drive revenue and earnings over time.

And the advisors, as you well know Adam, in that scenario are employees. And they're not working for the client, they're working for the product manufacturer that pays their paycheck. And I always like to say to people, you're not truly independent from an advisor standpoint unless the only person who can fire you is your client. And I think sometimes it's important for investors who have financial advisors to ask the question, who is it that they work for? What are the agendas of the individuals that they work for?

And I find most people in this industry candidly to be wonderful people. But sometimes if the alignment isn't there with the end investor, then incentives, pressure on the advisors over time can lead to some things happening in clients' accounts that may not necessarily be what's in their best interest. And to your question, I left Wall Street in large part because I was disenfranchised. I was frustrated given how I grew up and having met with quite a number of incredibly successful individuals and having been blessed to help design quite a number of family offices. What the most sophisticated, and this is, I'm sure the case with a lot of your listeners, Adam, what the most sophisticated families realized is the triangulation of advice, meaning separating advice from where assets are safely custodied and separate again from where products are manufactured and sold.

And then being able to have a team and technology to tie that experience together was the best way to receive advice in the most non conflicted, highest optionality, where you're not captive to products only of one manufacturer. For 100 plus years now that's the way it's been delivered for the wealthiest families in the country. And a big part of my motivation for starting Dynasty was to look at how could we democratize the triangulation of advice. And it's great for billion dollar families, but it can work for 100 million dollar families, 50, 10, million dollar families.

By having a truly independent advisor that gets synthetic scale through a partnership with Dynasty so that we can tie the whole industry together so that an advisor can leave captivity where they're a professional seller and go independent, now they're a professional buyer on behalf of their clients and with 140 billion dollars of instant scale behind them. And I think over the last handful of years, as the industry has really caught on to this model, as you well know, Adam, it's only been accelerating at a breakneck pace.

R. Adam Smith: That's great. It seems like part of your passion here comes from your personal values, wanting to have authenticity and connectivity personally and to give people choice. As an entrepreneur, essentially the RIA model is an entrepreneurship model and you have a lot of entrepreneurship in you essentially wired into you.

So essentially Dynasty is the mechanism for them to express that entrepreneurship.

Shirl Penney: Yeah, I think that's really well said. I agree. We spend a lot of time reflecting on, we talk about our purpose, strategy and culture. So really making sure that we're clear on the purpose which for us fundamentally.

And if I were to oversimplify it, I would say it's simply to make independence last. And by independence we mean, you know, yes, advisor independence and choice, to use a word that you just used. But we also are huge proponents of the American dream, especially given how I grew up. And we're all living our own best version of the American dream. But what's so unique and powerful about our model, and we talk a lot about this internally and this ties to our purpose, Adam, is that we get to live our American dream by empowering others to live theirs.

And there's that beautiful alignment and we have to stand and deliver. And if we don't, we get fired. And there's no threatening of an advisor who, you say, look, if you look to leave because you want to go somewhere else because you think it's in the best interest of your clients, that a lot of these big banks and brokerage firms are trying to intimidate or scare or sue the advisor that's looking to do that, we actually would help them transition and that level of accountability and alignment of us having delivered for them. And if we don't, they can more easily leave. We think results in better quality of offering and technology and capability set.

Because we know that every day our clients can leave and go do something else if we're not doing a great job of taking care of them and their client. But once you have the purpose right, you can be very deliberate about defining the strategy through a lens that aligns with those core values and principles of the business. You can come back to that frequently and make sure that key decisions are being looked at through that lens. If they're outside of alignment.

And if you have a business that's built to last, not built to flip, that allows you to have the right alignment with your investors so you can make decisions on what's in the best interest of the business over the long term, not just quarter to quarter, then when you consistently see through that lens, act accordingly over time, that's what then builds and defines the culture. Right. And the culture to me in a lot of ways is a defined purpose that's delivered consistently over a long period of time through the strategy. Results in a very deliberate culture that gets developed and over time can become institutionalized in the business.

But all of these things, like any type of relationship, and it's relationships amongst people, they need to be watered and invested in over time. And you have to be proximate with it. Because if you don't, those things can start to slip over time. And we only the paranoid survive, as we say. And we're very focused on making sure that we're proximate in spending the time so that those stories and kind of that institutional memory remains fresh and alive all throughout the organization.

R. Adam Smith: Thank you. It's great. And I think Dynasty at this point is probably the leading company of its kind, really providing that independent operational administration platform, which is great and it's embedded in the name, which is really cool.

I'm sure you own many trademarks, but I think you should probably think about adding that other one. You just had a slip of tongue that we make independence last. You probably should grab that. That's a good one for you, I think.

Shirl Penney: Yes, we have, but thank you.

R. Adam Smith: Okay. Good God. It was not a slip of tongue. I do want to point out that ultimately Dynasty and all good organizations are a sales organization. And you are wired and you're a very effective salesman.

And we know that the idiom of always be closing, ABC, is kind of the core of building a business. I love that quote from Alec Baldwin and Glengarry Glen Ross.

But also thinking about selling is not just about the act of selling. It's also determination.

And there's a proverb I found I wanted to mention. There's a Japanese proverb that says to fall down seven times but stand up eight times. So it really requires some determination in that sales process and to build an organization with sales. So moving into longer term thinking, maybe just bridge into that sales culture, because a lot of Wall Street and sales is sort of like a demonized or commoditized sense of sales. But if you apply sales properly over time, you can really build a very high quality organization.

And then of course, you have to infuse that salesmanship with proper culture. So walk us into the longer term thinking of the bridge of that and culture into Dynasty.

Shirl Penney: Yeah, no, I appreciate that. And the one thing I would just add before you answer that question, because I thought what you're saying about entrepreneurship is really, really accurate. To me, I find oftentimes the most important characteristic to be that of grit.

And at Dynasty, we hire for attitude over skills. Not attitude, no skills, of course, but is someone who really is determined and has demonstrated great discipline and is excited to drive that sustained excellence. Right. Knowing that dynasties are not built overnight, they're built through long term hard work, commitment to a big cause. And we're really looking for those people and have the grit because things are tough sometimes.

And if you have the grit and determination, you can make it through those times. And I think that really then leads into your question, which for us, we really are very deliberate around trying to bring on board, I guess what I call missionaries versus mercenaries. And the missionaries are the ones that are riding for a cause over a sustained period of time. They are clear on what their why is. They want to align with others who have similar why and purpose versus the mercenaries, which are more built to flip.

And oftentimes when things get difficult, they're the ones that quit the soonest. And to your question around growth, I think it allows us, Adam, to grow at a pace that I think many people would probably find uncomfortable. We actually like to challenge ourselves. We're constantly looking for not just new ways to do things, but to take on challenges that others perhaps haven't. We're looking to beat our own records consistently over time.

We launched the largest breakaway team in the industry a couple years ago and then came around and beat that record again by launching not only the largest breakaway, but the biggest team in the entire industry joined our platform and the number of accounts and assets that we transitioned were at levels never before seen in our industry. And we were excited about it. We're excited about it, to do something never done, never been done before, let alone in the industry, but at Dynasty. And to be excited about it and to have people raise their hand across all different departments and say, hey, look, I'm going to go on location and I'm going to go live in a different city for the next several months to make sure that these advisors and their livelihood and the relationships with their clients and all those things are protected. And this thing's going to be hugely successful.

Mercenaries don't do that. Missionaries do. And for us, when our purpose is to make independence last and it's to power the American dream and to strengthen financial literacy and financial wellness in this country, the goal becomes more. And for us, it's not just about a budget and trying to have, which we have been a Rule of 60 company for quite some time. We grow the business 30, 40% top line like clockwork, very profitable business with healthy, fair margins, in the mid-20s.

The result is a rule of 60 company. But that's not the primary focus for us around growth. It's that when we grow, we get to help more people, we get to help more end investors get an independent advisor. We get to help more advisors be their best version of themselves. We now have, as I think you know, Adam, we have 25 firms that we've launched from the banks and wirehouses that have enterprise values themselves of over 100 million dollars.

Right. There really isn't anyone in the RIA ecosystem that's created more wealth for more people than Dynasty over the last decade. And that comes from alignment around our stakeholders. And our stakeholders, as I also think, obviously it's our advisors, our clients that we support, but it's also their end clients, their investors, it's all of our team members here at Dynasty, as well as their families. It's what we call our resource partners.

So one of my pet peeves is we don't talk about vendors, we talk about resource partners. And partnerships are not sustainable for any long period of time if everyone's not winning at some reasonable level. So we're really committed to making sure our custodian and asset management and wealth technology partners, the resource partners can win over time. And then the fourth is obviously our investors.

And I think it is possible, if you're deliberate, to align the stakeholders in such a way that everyone can win over time. And for us, as we focused on it and been successful with it, it's allowed us to live up to our name, which is Dynasty.

R. Adam Smith: That's great. There's a lot of organizational philosophy that goes into a company like Dynasty. You have to build the strategic plan and the board and the governance and implement that and triple check all the KPIs all the time to make sure things are on track.

And sometimes you have to hire and fire people. So it's a constant. Just getting you on the podcast is hard because you're always busy. You have, I'm sure, tens of people reporting to you, and then you have over 150, 200 million dollars or more invested just even recently. And then you have a board of directors probably with seven to 10 people, and you have like hundreds of RIAs.

So it's a very busy ecosystem. But you tend to stay focused. I know. And be positive. There's an importance of that.

Maybe just talk a little about that power of positive energy and how do you infuse that? How does that relate to culture and even, like, how do you incorporate that enthusiasm, positive energy into, even into the board, into your relationship with your investors?

Shirl Penney: Yeah, that's a great question. Look, you wouldn't get where I am, I guess, in my professional, or frankly, even more importantly my personal life with my incredible wife Marianne, and so blessed to have two incredible daughters that are 20 and 18 and great partners here at the business. And I've always been a glass half full person.

I feel that today is the best day of my life. I feel that tomorrow is going to be even better. And tomorrow will be the best day of my life. So that is very much how I'm wired. Probably a bit irrational when it comes to business, a bit crazy like a lot of entrepreneurs are.

But, you know, for most people, if you sat around and examined the odds, I mean, the odds of me sitting here and having a conversation, given where I started in life, about what we've been talking about are probably 10 million to 1, right? So to me, I've never been one that is focusing on the odds. I just believe in myself and the team and those around me and just commit to working hard. And I think someone who believes in kind of, the ability to manifest destiny and visualize something. I tell my kids all the time what you see is what you'll be.

And I think that's true in life and in business as well. So we have big, bold ambition. We're not naive about what it's going to take. But we've been talking a lot about alignment here. I think it's really important to align yourself with the other stakeholders who are going to support that ambition.

For us it was really about long term investors in the business. I'm incredibly blessed also to have Harvey Golub as our chairman. Harvey ran American Express, obviously for quite some time, one of the great legends of American finance. And he's a good friend and mentor. But he also is a day one investor in the business.

And I had Harvey, Todd Thompson, who was CFO of Citi and ran the wealth business there as a day one investor. Bill Donaldson, of course, who was chairman of the SEC, head of the New York Stock Exchange, one of the founders of DLJ. So just been really fortunate to have some of the pillars of industry believe in the cause, believe in the ambition and then be patient, right, because we, you said it earlier, we invented this category and now we're way out front. But in the early days when you invent a category it takes a while to educate the market. But because of that alignment, in the early days there were a few quarters where we missed budget.

It's been quite some time now since we have. But in the early days it was a grind. But it's in those moments again when you can test alignment and you can figure out who your partners are. Right? Everyone can be a great partner I suppose when things are going swimmingly and really well. But when you have some challenges, you understand how strong that alignment and partnerships are.

So we've been plenty battle tested over the last 16 plus years. And the result of it is we have a business now that has hundreds and hundreds of millions on the balance sheet, approaching, actually close, probably close approaching a billion if you look at mark to market on some of the assets that we have, we have no debt, we have the fastest growing firm in our ecosystem by a lot. And if you came to any of our board meetings, Adam, you wouldn't hear any of that. All we do is sit around and talk about how we get better. We don't talk about really anything else.

We take a few minutes on what's going well. They can see the deck in advance. They can see how well the business is doing. And it's really just this incredible focus on scaling the business. Obviously we're a tech company leveraging AI and I think, very creative, safe, but innovative ways, the ability to tie together more of the industry to help more people.

Yeah, I just feel this incredible sense of cause and conviction of where we are right now. It's still very much the early innings for Dynasty, very much in an essential industry, that of wealth management. I don't want to go off on a tangent, but this is the focus and the why for us, is that you still have 78% of Americans can't put their hand on a thousand dollars in an emergency. You have, number one cause of divorce in this country is financial stress.

You have a lot of pensions and different pools of capital that people are relying on later in life that are trending in the wrong direction. You get federal and state budgets that are not well balanced. Financial wellness is in need of improvement. And I feel very strongly that the way that you help people do that isn't by selling them products and services that they don't necessarily need. It's really through advice and literacy.

So again, incredible conviction of the cause of what it is that we're doing and have great energy to keep improving this most essential industry that's been around for hundreds of years. Because I think we're at finally an inflection point where independence is winning and Dynasty's having a lot of fun by helping to lead the way.

R. Adam Smith: Thank you for that. That's very insightful and I think motivating for the thoughts. Very motivating for entrepreneurs out there that are in the wealth management and asset management and MFO space. There's lots of different models.

So ultimately a lot of RIAs will remain, both managers and RIAs will remain within the wirehouses. Obviously the large wirehouses have 400, 600, 800 billion each, which is wonderful. But at the same time your platform, and we see these open architecture and independent platforms, including Addepar as a case and iCapital, are really wonderful platforms that empower, but also the multifamily office ecosystem, which is sort of like your brethren organizations, right, are massive now, not just the old school Bessemers and Oxfords, but now we see obviously Pathstone and Crescent, Sandy Aire, et cetera.

Massive, Alti and Tiedemann's doing, it turns out. So these are very large organizations. And so I think the difference is that ultimately some of these organizations will be sold and some will not be sold. Some will grow continuously, some will atrophy and sort of stumble. So in terms of Dynasty, I think you're on a very unique path in a sense that it's very difficult to have continuous growth and external capital and governance and the burdens of that, but also maintain a sense of independence and not look to flip it.

Essentially. There's a quote that I was thinking of based on what you're saying, that it's harder to stay on top than it is to make it there. Reminds me of you, but also the dynasty, or your Dynasty and big companies I often cover and have family offices, family enterprises only. Podcast is looking at these bigger companies also. Another quote though is referencing that the greatness of a dynasty lies not in how long it has been ruled, but in what it has left behind, which is by Will Durant.

So thinking about your legacy, obviously there's an end game at some point, but what do you want to leave behind in terms of the brand itself, in terms of the organization itself and beyond yourself as a person?

Shirl Penney: Yeah, no, I appreciate it, and I, so, you laid a lot there in what you just laid out. So I would, I guess I would break it into three quick categories. The first is I agree high level with what you said, but maybe looking at it from a slightly different perspective in terms of how the industry will remain broadly for some period of time, the way it's structured today. The biggest reason for that, I think, is inertia.

I think if, you know, we could start the whole industry over today, I don't think, I think most people would agree that you wouldn't say, okay, we're going to take big bureaucratic banks that are not known for innovation, that are not known for cutting edge technology. We'll put all the advisors inside of there. We'll force them to only use the trading desk internally and internally developed products and go out and be professional salespeople to people who need financial advice. Given where we are today, given the knowledge of what's possible, what consumers are asking for, innovation of technology, open architecture, the business would look quite different if we literally could wave the magic wand and start it over.

But inertia and complacency, which is the second component, are very much your friend or your enemy, depending on where you sit in the industry. But over time, I think because of technology, it's getting easier to move from both the client and the advisor perspective. And I think the result of that will be people being less complacent. Right.

So they'll know that they can make that switch easier to put themselves, their team, their families, and ultimately their clients in a better position. So I wouldn't trade where we sit with anyone in terms of macro demographic trends, in terms of end consumer demand. And the fact that it's this beautiful alignment where everyone can win, which I think is what drives the flywheel even faster, is when people realize that the alignment makes possible that level of aligned, positive momentum. I think it's driving more people towards the model. In terms of legacy, I'm still pretty young.

I'm 49, I'll be 50 at the end of the year. And I've started this journey right out of college and have great energy for it. I love it. I don't really have any other hobbies other than my great relationship with my wife and kids and blessed to have a handful of friends. My happy place is sitting in the captain's chair and being able to work with all the stakeholders that we've been discussing.

So I think at some point, Adam, we probably get to, I guess what I would call a refounding of the business, which I think is important to do that every decade, decade and a half, to kind of update everything with fresh thinking of all the team members. It's pretty unique that we can do something like that with me still here. But I do think an organization, I mean, you can think of so many great brands out there, whether it's Disney or Apple, and the list goes on and on, that have continued to thrive post the original founder, and I study and think about a lot of those businesses. We're trying to instill a lot of those great stories and make it the process of how we constantly talk about purpose, strategy and culture, one that is going to outlive me. But as I said at the onset of this, you don't name the company Dynasty if you certainly don't have that ambition to win consistently over time and to have a business, I hope, that will tie a part of my legacy to be, that we seek to do business the right way with integrity, with a team of people who are really waking up every day and thinking about how they can take care of the advisors, the end client, all the stakeholders. That if they make a mistake, they live up to it.

They're incredibly accountable, they're transparent. And by doing those things and creating this new model, I hope that somebody would remember me as someone who helped change a couple hundred year old industry meaningfully for the better and made that industry better. And I do have a high level of conviction that we're headed down that path, but a lot more to do. So I'm not thinking about retiring anytime soon, my friend.

R. Adam Smith: Okay, thank you for that point of legacy.

Of course, Dynasty is doing very well. It seems it will be around a long time with that philosophy and the name and very, very strong capital partners growing at a very nice clip, which is great. And again, you're really empowering the lives of the advisors ultimately and making their organizations run better, faster, smarter, and in turn that empowers the lives of the clients. It kind of reminds me a little bit of the Compass real estate model in a sense. It became such a massive winner in real estate, in a sense, because it changed the game.

Serving its partners, serving its affiliates essentially as the brokers, as opposed to just marketing to the end consumer, in a sense, which is interesting. So thank you for all of that. Businesses that are aligned like yours require a very complex formula puzzle of success. I've seen you build this from the very beginning. Obviously a lot of passion, commitment, capital, perseverance, grit, as you said, just maybe let's wrap up on the culture and the alignment and how you empower your team and people also because you have infused equity into the organization.

I just want to wrap up with that concept of the importance of shareholder alignment and equity infusion. We see that also statistically be very important. We also see it at KKR, for example, with Pete Stavros and ESOPs and so on. So just another comment on that as well, in terms of equity ownership, also as a corollary to the internal equity alignment at the RIAs that lift out into an independent organization.

Shirl Penney: Yeah. So the first part of that, specific to Dynasty, all of the stakeholders essentially are aligned. Everyone is an equity owner. We have one share class at Dynasty. It's all common equity.

Everyone is standing shoulder to shoulder. There's no preferences that could drive misalignment. Everyone is getting up every day and thinking about how we can make the business better for the benefit of all stakeholders. So every person at Dynasty, an equity owner, which means for the most part, so their spouses, for those that are married.

So when they're working really hard, they know that there's benefit through the equity ownership which has made material at this point. 16 years in, there's quite a number of success stories in the corporate lore and in storytelling of wealth creation that has resulted from the sacrifices of the families that work here. Quite a number, Adam, of our clients have also invested, meaning the RIAs have invested in the business as well. It's obviously at their option, but a number of them have done so and there's nice alignment there. A lot of our resource partners, we've been very public about this, whether it's Fortress, whether it's Schwab, who is the largest custodian in the RIA space, they're incredible partners and investors. BlackRock, largest asset manager obviously in the world, is an investor.

The largest financial firm in the world in terms of enterprise value, as you well know, is JP Morgan. They're an investor in the business. So incredible long term oriented institutional investors. Our largest investor is the Glick family, a very sophisticated family office headquartered in New York. They were day one investors, have been very supportive along the way.

So everything from day one investors, every new person, Adam, who comes into the business has an opportunity to buy equity in the business. We also have equity and options programs as well. But quite a number of people, I would say at this stage, still well over half the company, have written checks in the business, everyone's an equity owner, but over half of the people have also acquired equity as an investor. So culturally, everyone spends money here like it's their own, because it is.

And you see that play out in examples of people being very prudent with their and the firm's capital. If you were here, you would see, all internal meetings, any document that gets printed is printed in black and white versus color, which is seven times more expensive. Any new team member might get yelled at, I say that tongue in cheek, by some of the other team members, and they look through that lens on waking up every day and saying what's best for the company, what's best for the longevity of the company, because again, a healthy balance sheet, a healthy, growing, thriving Dynasty at the end of the day is ultimately going to be able to help more people.

R. Adam Smith: Amazing.

Thank you for that. I'm glad you shared some information on the company's growth because there's a lot of founders and entrepreneurs and investors out there in wealth management and fintech and back office and admin that want some inspiration, they want some direction. They're building their own businesses and they look to the leaders in the industry. Of course, I lament that I once tried to invest in your business, but we didn't pay enough. So I do remember that.

Shirl Penney: I don't know if you didn't pay enough or you wanted too much structure, but.

R. Adam Smith: All right, that's good. We're still friends. That's fine.

Yeah. I'll wrap up with another quote. I'm using a lot of quotes today, but I liked Michael Jordan has a quote. He said, the hardest thing in sports is not to win the championship, but it's coming back the next year hungry enough to do it again. And you're doing that at Dynasty with your team, obviously your board, many what you mentioned their names.

So hats off to all of you. It's great to have you on the podcast today and on the family business podcast, to talk about ultimately the company in the industry. And it is very impactful to the family businesses, to the family offices, to the alternate worth investors ultimately underlying and living and having their wealth managed by the ecosystem. So maybe just a parting word on the industry, kind of like what's your favorite part of working with the industry? And so on.

Shirl Penney: Yeah, no, I appreciate that. I would say to anyone who might be listening or knows somebody who is listening and can share this message, it's a wonderful, beautiful, worthwhile industry to be a part of. And I think somewhere along the way, maybe around the financial crisis, where the industry in some ways got a bad rap because I think of the lack of alignment, the misalignment, the product sales culture, the lack of fiduciary discipline, some of the public bailouts and the like, the industry kind of got a bad rap. You look at so many kids coming out of business schools and colleges, as you know, back when we were kids, Adam, the amount of our peers that wanted to go into the industry. Right.

It was a lot more competitive in some ways back then, because now I think a lot of people have certain feelings that maybe aren't all that favorable about the industry. But the industry is not just Wall Street, and there's still some great opportunities and incredible firms on Wall Street, so they should pursue those as well. But there's this whole cottage industry now on the independent side, where you get to sit on the same side of the table with the client, to help people live better, richer, fuller lives. Because at the end of the day, money is just a tool to accomplish your personal goals and objectives.

And to the extent you have less stress and less anxiety because the financial piece is cared for, well, you can live, in some cases, happier lives. So it's an incredible profession. We are very focused on getting more of our great veterans, as I like to say, the great protectors of the American dream. They should have every chance to live that dream that they sacrificed so much to protect. So being able to bring more veterans into the industry, we've been very successful at bringing in other retired school teachers.

We've been successful bringing them in because who has more patience and better listeners sometimes than school teachers? So the ability now to leverage AI and technology, I think is making it even more important to have people in our industry that have incredible empathy, the human element of it, if you will, where they can understand and listen well to the goals and objectives of what someone is trying to aspire to do. And then tech enablement allows for scaled execution of a lot of the implementation components of the plan. But it's really where the magic happens, is on the front end. So while I do think that there is this rapid cyborging of the industry, the human piece is going to remain what's most important for the foreseeable future.

And so what I love is helping to bring new people into the industry who have the aligned why, which is really around helping people and doing business the right way and improving the industry. And I think that's probably what I like most about it. But I hope some of these comments, maybe if there's someone listening who's been on the fence about jumping into the profession, they'll consider doing so.

R. Adam Smith: That's great. Thank you so much. And keep in touch with Shirl and Dynasty on their LinkedIn and their feeds and their newsletters, and you'll continue to learn more about them and the very inspiring organization that he and his team have built for 16 years.

That's quite unusual to maintain the same business for that long with continued growth. So very, very much kudos to you. Thank you again for your insights and candor and inspiration today and for our friendship. I hope you enjoyed the podcast today.

Shirl Penney: Thank you very much. I have very much enjoyed it and look forward to seeing you soon, my friend.

R. Adam Smith: Thank you, Shirl. This is R. Adam Smith signing off. Thank you for listening to the Family Business Audiocast, and we'll see you in the next one.

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Explore the strategic intricacies of family business success with the RAS Family Business Audiocast. Join R. Adam Smith as he delves into exclusive discussions with global leaders shaping the future of private wealth and enterprise. Each episode offers a rare glimpse into the core decisions driving prosperity in high-stakes markets. Tune in to gain expert insights and innovative strategies that empower family businesses to thrive across generations.

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Family Business Audiocast™