Webinar
Aug 25, 2022
12:00 pm
PT
Dan Rioux

Dan Rioux

FAMILY OFFICE CAPTAIN

Dan graduated with a degree in Engineering Technology, and co-founded businesses in the financial sector, focused on financial planning and the advisor/client experience.

Matt Goff

Matt Goff

CHIEF INVESTMENT OFFICER

Matt is responsible for investment strategy and asset allocation decisions for all of Ark’s clients, in addition, he leads the team of investment advisors and continues to serve as a personal advisor to many of the firm’s valued clients.

[00:00:00] INTRO

[00:00:00] Alina Trigubenko: So, very nice to meet you, Dan Rioux, and introduce you to our guests. And very nice to see you again too, Matt Goff. So let's start by introducing.

[00:00:19] Dan Rioux: Yes, absolutely. So ARK Financial has three different divisions. We have a wealth management, our wealth management, which is what Matt heads up. We have our family office, which is what I head up and then we have an ARK Academy. It's all based around financial services, of course, and financial advisory in the core of our group really came out of advisory services, probably frustrated with how advisory services were delivered, especially to our our primary client, which is very successful individual small business owners, probably first generation.

[00:00:51] Dan Rioux: And so we deliver financial services very uniquely and catered to that group of high income, very successful business owners who probably think differently. They probably think about their wealth differently. And so therefore we have to approach them and help them differently. Matt, would you add anything to that?

[00:01:08] Matt Goff: No, I would say that, yeah, that we were born out of this out of this idea that we wanted to be independent minded and literally serve that niche, that client the client that Dan just described. We want to gear ourselves and build our firm that supports exactly that type of client.

[00:01:24] Matt Goff: So on the wealth management side, on the advisement, side planning side, everything is geared towards that type of client. And the other piece of that is simply because we feel like that is a has a multiplier effect, right? If you and the others go out, build a business, hire people, take all the risk, build into the economy, provide, for so many others that depend on you.

[00:01:46] Matt Goff: Because of that, we felt like that we could make a difference by helping those folks do that, build their businesses with more financial strength make better financial decisions, and that that would have an impact.

[00:01:59] Alina Trigubenko: Thank you so much. Definitely, the financial world is a very complicated world to navigate.

[00:02:05] Alina Trigubenko: So the work you're doing is very important. I think it has to be in the kind of primary education, anything like that, even financial basics. I'm reading a Financial Intelligence book and I definitely think that should be, that book should be taught in schools and it should be just the basis of our education.

[00:02:24] Alina Trigubenko: So I appreciate the work you're doing. My question is: who are the primary advisors to the business owners and what is their role? For example, what kind of advisors should solopreneurs and not only solopreneurs seek for when they're looking, for example, financial advice or financial consulting?

[00:02:46] Dan Rioux: When you're first starting out, it's important to have good advisors around, but we can overthink it too as well.

[00:02:52] Dan Rioux: I think most business owners are pretty smart on their own, but it is important to have some of the basic advisors and then recognize and be able to recognize and discern good advice, which is often difficult. I think that's where we come in. But you know, it's important to have good financial advice as it relates to tax and as it relates to the legal and the structure of your business, because a big part of building your business is you need out because a big part of building your business is that you need to have profitability.

[00:03:19] Dan Rioux: And so you want to protect that profitability and not go backwards. So as you're building protection is making sure we're not going backwards and you want to have some purpose behind that and peace of mind. And you want to make sure you're paying the right amount of taxes and doing that in an efficient way and having good trusted advisers from a tax standpoint is very important.

[00:03:39] Dan Rioux: Those are the first two from a solopreneur that I would think about. Finding someone you trust. And I think it's so important to educate yourself to a point to you asking enough questions. Even if you're not a domain expert, you force those advisors to educate. Don't be shy to ask questions and the next question and I think sometimes we're intimidated by experts in other fields.

[00:04:01] Dan Rioux: Well, we will often in our own field talk our own language versus we need to speak the languages of our clients. And so as a solopreneur, you should be forcing your advisors to to clarify what they're speaking about. So that you can understand it in your own terms and as it applies to your own business.

[00:04:20] Dan Rioux: So those are the couple, the primary advisors. And as we build wealth I think we look at wealth differently. I want to let Matt answer that on the advisory standpoint from a building of wealth, how he would recommend.

[00:04:32] Matt Goff: I mean, I would just say early in your you know, as you're building that, you just want to make sure the advisor is aligned.

[00:04:40] Matt Goff: I mean,we take kind of a fiduciary approach where, you know, you may show up to your traditional financial advisor, that advisor, but, you know, right or wrong, they don't make any money unless you purchase services from them. If you move, you know, several hundred thousand dollars or more into an account that they manage, or if you don't buy a product from them or something along those lines, well, solopreneur may be in a place where they don't have the excess cash and they should be putting their cash back into their business.

[00:05:11] Matt Goff: Or their own development or other priorities. And if that advisor is only paid by selling you financial services, then you're not going to get good advice. So you just need to make sure that they're aligned. An advisor like advisors that we have set up like Dan and his team, we have very successful people, very successful entrepreneurs running successful businesses who have little to no, you know, sort of liquid wealth to manage, which for a traditional financial advisor out there is not that interesting.

[00:05:46] Matt Goff: So we try to develop a model that is, we just want to make sure the advisor has your interests in mind, not some incentive to sell a product or a service that you don't need early in your in your career.

[00:05:55] Alina Trigubenko: I think one of the biggest fears that I hear as I'm working with a lot of service providers, financial advisors, financial consultants on the Profi side of the clients that we serve.

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[00:05:55] Alina Trigubenko: I think one of the biggest fears that I hear as I'm working with a lot of service providers, financial advisors, financial consultants on the Profi side of the clients that we serve. Coaches, different kind of consultants and trainers across the board, the industry doesn't matter. But the common kind of pattern that we hear and see is that the very last thing that those kind of professionals want to kind of give off of is the feeling of being salesy and just doing it for, for the sake of only money and only upselling clients instead of actually focusing on an impact.

[00:06:37] Alina Trigubenko: And that is based on our research and based on our data. The clients can always feel it. And that's one of the also one important aspects as they continue engagement with their professionals is how much do they actually think of me versus the revenue that they get from me. So I'm sure it's obvious, but I just love data and that's something that we're hear across the board.

[00:07:01] Alina Trigubenko: If we're being a bit more specific, what should you expect from your financial advisors as a client or a family office or financial advisor in general? And how would you recommend engaging with one and working with them? For example, what questions small business owners and not only small business owners should be asking their advisors?

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[00:07:23] Matt Goff: I mean, the very basics, like you would do due diligence on any professional that you were working with them. I would specifically look for experience, not necessarily in the industry in which you operate, but certainly experience working with entrepreneurs or, you know, if you think about the type of business that you run or the circumstances that you're in.

[00:07:44] Matt Goff: That person has some experience specifically in that niche, I think is mportant. I mean, you know, from just working in whatever industry that you work that experience is really valuable. So I would look for that. I would look for just general experience in the business as well. Probably, you know, ten years or so is something that I would look for, just simply because they will have seen just about everything in that period of time.

[00:08:11] Matt Goff: And you know, this is an advice business, right? I mean, that's what you're paying for: advice and experience and wisdom is what you're paying for. I would look for those things upfront and then I would just look can this person pretty quickly identify what I need and how they can help and express it in a very clear way.

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[00:08:29] Matt Goff: OK, these are the three or four things that I can do for you. And here's how that's going to help. I think you should be able to get to that point pretty quickly. And if not, then you should probably keep looking.

[00:08:41] Dan Rioux: Yeah, I think it's key for like Matt said is not necessarily and always industry alignment, although there can be some there can be some efficiencies with that.

[00:08:51] Dan Rioux: But certainly if you're a small business owner, your advisors should have worked with small business owners in the past and have a history of doing that and like Matt said clear and simple communication, constant, frequent accessibility - that should be an expectation. Their business is about advice which is strategic and also logical a lot of times.

[00:09:14] Dan Rioux: But there is a feeling we're all human beings. So there's a feeling and a trust that you should have about your advisors. You should feel comfortable sharing and being very vulnerable with an advisor. And if you don't feel like you can be vulnerable with an advisor, you want to either spend more time and get to that point or maybe you have the wrong advisor or maybe the chemistry is not there.

[00:09:32] Dan Rioux: It doesn't mean that that advisor is wrong or maybe not right totally, but maybe it's just not right for you. So there's other advisors that are out there. You can find one for you. I think that should be the expectation is don't settle, Find somebody that you feel very comfortable with. that will put in and serve.

[00:09:50] Dan Rioux: Going back to your previous statement of being salesy, we're problem solvers. We should be serving our clients. We should be solving problems. We should be empathetic and [00:10:00] be right alongside of our clients and experiencing the problems and their concerns and trying to figure out solutions to those problems and concerns that they have.

[00:10:08] Dan Rioux: I also think that the questions that they should be asking should be very thorough, and I think they should pay attention to how the advisor answers those questions. Are they willing to answer questions or are they frustrated with the fact that you're asking questions? Which means that you should understand what their alignment is.

[00:10:26] Dan Rioux: Going back to Matt’s first point is you should probably understand how they get paid and not that there's any right or wrong way. I'm not going to say that there's many ways different advisors get paid given where you're at your business, but you should just understand that and having a clear knowledge and transparency of that and be comfortable with that.

[00:10:44] Dan Rioux: And if something feels wrong, ask more questions.

[00:10:47] Matt Goff: And then one other element that I just just want to mention in general is this is an industry where you can go to some big household names and find professional financial services, and then you can go to independent shops like ours. Sometimes the perception is that the big household names, the big famous Wall Street names that you're getting a better product or service.

[00:11:10] Matt Goff: But again, this is an advice business. And when you go to those large banks what often you're going to get is, regardless of what the advisor feels is the right thing, they have incentives and they have pressures and motivations to sell products, services that are in the corporation's interests and not always in the client's interest.

[00:11:30] Matt Goff: That doesn't mean that everybody who works in those organizations has malintent. It just means that you have to be aware of that. And we've seen it. I've seen it personally and clients who sell, who exit for tens of millions of dollars get advice that is not stacked in their favor. It's stacked in the favor of the corporation that's taking care of them.

[00:11:52] Matt Goff: And it has surprised me. Both Dan and I have worked in both independent environments and in the corporate environment. I genuenly think that independent advice is is very valuable. As long as you're looking for experience, someone that has a track record of keeping clients for a long time and has the kind of clients that look somewhat like you, then I think you're probably better off in an independent environment.

[00:12:13] Alina Trigubenko: Thank you for that. That’s also common pattern within other service professional verticals, too, this kind of hyper personalization. That's what I noticed across the board clients are looking for. They are looking to kind of ensure that the professionals they're picking to work with, they're choosing to work with, especially in the long term, especially in such a intimate engagement that, you know, will require, as you said, vulnerability and very high level of trust.

[00:12:42] Alina Trigubenko: The first thing they normally check is do they know my persona? Do they work with others like me? That's definitely a big trend in the overall professional services industry. And yeah, thank you for that. How would you say that the wealth management is different in the family finance office environment?

[00:13:00] Matt Goff: Just for a matter of definition, when we think of the term wealth management and think of all the financial services that we offer, wealth management sort of specifically means to us literally, asset management investment management, investment related advice.

[00:13:14] Matt Goff: So speaking along those lines, you know, I mean, what you just said is sort of the first thing is that if any, if any of you've had experience, when when you were first starting out or working with kind of the average sort of retail financial advice, you know, they have a process that always kind of looks the same where they test your quote unquote, risk tolerance.

[00:13:37] Matt Goff: They ask you a number of questions about your financial circumstances. But really, regardless of how you answer those questions, there's about ten different sort of portfolio choices that you get. And they all are very slight variations on on the same theme. And so in a family office environment that gets thrown out the window, everything has to be custom.

[00:13:59] Matt Goff: Everything has to be tailored as a business owner in whatever industry that you come from, you're going to have a very unique set of circumstances. You're going to have a very unique cash flow that's very different than say an executive of a company that has sort of a more fixed cash flow and sort of retirement trajectory.

[00:14:21] Matt Goff: As a business owner, all of that looks very different. You know, someone can have a very large balance sheet with zero liquidity or the opposite. So we always start in terms of planning a blank slate to get to know exactly what the client need. Wealth management is to kind of make it very, very simple is when you think about pulling money out of your business ventures and putting it into a diversified portfolio, something outside of your business.

[00:14:51] Matt Goff: So we're thinking about building this pile of assets over here. And it's really about, how much money do you want and when do you need it? And so we just sort of build a plan around that. So the first thing is has to be customized, has to be tailored. And literally, it always looks different. The plan always looks different.

[00:15:11] Matt Goff: The assets that we used to invest in, they kind of depend on, again, what we're trying to achieve and so forth. So the next thing is you know, we don't use in a family office environment, when you typically have larger buckets of money to invest, you're not limited to a pool of, you know, publicly traded stocks and bonds.

[00:15:31] Matt Goff: Suddenly, you know, about 80% of the investable assets in the world are or are in the private markets. So as that liquidity and portfolio grows in the time horizon, and length lengthens, you have more options to where to invest and then if you can give up a little bit of liquidity, which a lot of times we can in this environment, suddenly the options you have expand quite a bit.

[00:15:57] Matt Goff: Venture capital, private equity, private [00:16:00] credit, digital assets, I mean, you name it, suddenly the world kind of broadens and how you can invest. Our job is not just to be familiar with stocks and bonds which are which are certainly a part of most portfolios, but to also bring to our clients knowledge and expertize access and some due diligence around the rest of the investable universe and bringing those opportunities to our clients.

[00:16:26] Matt Goff: So those are the main differences. Customization and then the portfolios we build do look different and include more assets.

[00:16:33] Dan Rioux: I think another point at the beginning of that, too, is also we recognize that usually the business owner their greatest asset is their business and before they get to the regular investable type of thing.

[00:16:44] Dan Rioux: So we recognize that a lot differently and they probably recognize that as their most controllable asset. And so we think differently alongside. Usually that's a contradictory type of relationship where you know, most investment advisors are trying to extract as much [00:17:00] money out of the business as possible to put into assets versus embrace the moment, embrace the actual attitude and mentality of a small business owner or a very successful business owner.

[00:17:11] Alina Trigubenko: Interesting, mentality and tailored approach. I love it. Thank you. Extend your mentality to broader spectrum, yeah. What are some of current market trends that could affect this?

[00:17:26] Matt Goff: There's a couple of just dominant themes that sort of are sucking all the air out of the room. And they're I'm sure they're familiar to everybody on the call.

[00:17:36] Matt Goff: But the first is inflation and then the second is basically the policy response to inflation, which is, you know, raising interest rates. And if I could just sort of paint that picture in a different way, kind of how we got here. And what that might mean going forward is, we went into 2020 with a pretty hot asset market, stock markets, real estate, et cetera were all doing pretty well.

[00:18:04] Matt Goff: We went into COVID. Everything got turned upside down. The government response, again, this is not a political statement by any means, but it's just the government response over the next 18 months or so. And, you know, post shutting down the economy for COVID, you know, we had something along the lines of $1,000,000,000,000 hit to the economy and something around a $5 trillion response to the trillion dollar loss.

[00:18:30] Matt Goff: around a $5 trillion response to the trillion dollar loss. Economics 101, if you put that much stimulus into an economy, you're going to have inflation, increase demand, et cetera, et cetera. And then and then you had, other complicating factors along the way with the war in Europe and other things that are sort of complicating inflation as usual.

[00:18:57] Matt Goff: No one can really predict how this plays out. [00:19:00] It's not likely to go away soon. It's not likely to get a lot worse. But it's probably inflation is probably here for a while. Which brings me to the second thing, which is inflation. If you're a politician, you know, it's one thing if the stock market drops, you anger the folks in the world who own a bunch of stocks and you make them uncomfortable.

[00:19:21] Matt Goff: Well, that's not the majority of the people that vote. When inflation is high, you're literally hurting just about everybody in the country. And the tolerance is very low. So unfortunately, what the Federal Reserve has to do is they have to stamp on demand. You have to if you're going to undo inflation, you have to sort of reverse course instead of having too much money in the economy.

[00:19:46] Matt Goff: You have to sort of squash demand and make it. And, you know, typically when that happens, it can lead to a recession and lead to I mean, that's exactly what they're trying to do. They're not out saying that. But when you raise interest rates quickly, and severely and you try to squash demand, you're probably going to get what you're after, which is you're going to see a slowdown in the economy.

[00:20:10] Matt Goff: You're going to see, some pain likely in the asset markets, which is stocks and bonds and real estate and things like that. You'll likely see a pullback in those areas. So those are the two dominant themes but those are all, that's on the margin, right? That doesn't mean if you're running your business and we go into a recession, that doesn't mean your business is going to fail.

[00:20:31] Matt Goff: It just means that if you're running your business poorly, if you're highly leveraged and you rely on debt, you don't have a spare dollar at the end of the month to pay your bills or to make payroll, that's a tough environment. If you run your business, if you run a good business with margin and you're thoughtful about about your expenditures and so forth, it's actually very opportunistic for business owners.

[00:20:55] Matt Goff: If you've got some strength, if you've got some resiliency, these are the times when 

[00:21:00] good businesses become great businesses. And so that's another thing I would say I would optimistically say as an investment manager, that's exactly what we're looking for is in this environment, you typically see prices drop on assets and good businesses get punished along with bad businesses.

[00:21:17] Matt Goff: And that's an environment where we'll be looking for opportunities to buy because we've got some margin and money on the sidelines. So those are the big themes in the short term. Longer term, I think there are some trends that are that are really interesting and can might be useful to to discuss as well.

[00:21:36] Matt Goff: What I just discussed is sort of the it's like the short term environment in which we're playing. It's sort of like you look outside, what's the weather? Is it a good day to go outside and take a hike or not? And right now the weather looks a little ominous, right? Because of inflation, rising interest rates, the desire of the government to kind of squash demand and get inflation intact.

[00:21:58] Matt Goff: Asset prices are still high so they have a long way to fall if they do fall. So none of that predicts what's going to happen. It just says the likelihood the conditions are ripe for kind of a pullback, a recession, a drop in asset prices. Longer term because the decisions that we make as as investors if you bring me money to invest I'm not going to say, hey, I'm going to invest this and getting back to you in six months.

[00:22:25] Matt Goff: We're looking longer down the road. We're looking to double this money over, say, five years or ten years or to build, you know, retirement money or whatever the objectives are for the client. So a longer term, there are just some things in this in the economy that will probably drive a lot of a business and in the coming years.

[00:22:46] Matt Goff: And so clearly technology is part of it this whole premise in which we're having this conversation, the business that you run, all of this is driven by technology advancements, productivity advancements, the ability to reach an audience. All of that is going to continue to drive new business models, drive the cost out of reaching customers around the world and so forth.

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[00:23:08] Matt Goff: So that's a very positive long term impact. The research dollars that are going here in the US and overseas into artificial intelligence, machine learning, robotics, automation combine those with another trend, de-globalization, right? We all learned how vulnerable we are to having so much of our supply chain, you know, coming out of China or other, you know, other regions that sort of dominate a certain sector.

[00:23:38] Matt Goff: You know, if we can't get our medicines, if we can't get our medical supplies, if we can't get our critical infrastructure supplies because of something going on in the world, that's a bad deal. So what's happening? Factories are right now being built along the border in Texas and California to replace manufacturing that was happening in China or it's being diversified here in Austin.

[00:23:59] Matt Goff: Samsung is building a semiconductor plant. It's a huge geopolitical significance that they're doing that to sort of manage that risk. So thinking about all the trends. If you think about bringing manufacturing back to North America, Latin America, you know, de-globalization, regionalization, that drives a lot of themes.

[00:24:23] Matt Goff: Another one is demographics. So again, you've got these two big bubbles in the US and then that's largely mirrored around the world where you have the baby boomer generation. Early sixties to mid seventies now, huge generation, all the wealth, something like 70% of the wealth is in that demographic.

[00:24:45] Matt Goff: They're retiring. What does that mean for the industry that you work in, for the clients that you work with? You should think about that because that's a massive, massive like that's an unstoppable trend, right? I mean, what are they going to spend their money on if you can sort of [00:25:00] figure that out, that that's a huge global trend.

[00:25:02] Matt Goff: Those are the big ones, right? So technology, de-globalization, demographics the other demographic is the millennials. Right? Where the millennials are in their lifecycle? They're doing things a little bit later than previous generations did. But they're still going to do all those things are still going to have families.

[00:25:19] Matt Goff: They're still going to send their kids to school. They're still going to send their kids to universities, are still going to buy homes. They're still going to look for work. All these types of things are still going to happen. So as investors we look at those long term trends and say there are abundant opportunities to think about.

[00:25:37] Alina Trigubenko: Thank you so much. Yeah, I see you mentioned from Good to Great. It sounds like you've read that famous book by Jim Collins that I always refer to and actually based on Jim Collins, what makes the companies good, what differentiates good to great companies, what makes the company great is this hyper focus on the value for their customers.

[00:25:58] Alina Trigubenko: And this is a perfect time for us, for technologists, for companies that deliver technology and software services. If you just calm down, tone down all of the noise and focus on the value, nothing else. From what I'm reading, companies are surviving and winning in those kind of markets. The same advice is applicable to all of the businesses because ultimately business is about value creation and those in good markets can be pulled in many directions.

[00:26:29] Alina Trigubenko: But now it's the perfect time to just focus and deliver the results to the clients. To the next question, what are the practical advice for service professionals like yourself, people that are working your path that are maybe in the beginning of the journey or people that are at the same stage as you are, any practical advice that you can think of?

[00:26:52] Dan Rioux: Educate yourself as much as possible and be a lifelong learner. I think the ones that I have seen in my 22 years of this industry is the people who have done the best focus on their clients and they learn and they discover niches that way too, because I think you become most passionate about serving the people that you like learning about solving those problems.

[00:27:14] Dan Rioux: So if you're just out for the money or if you're just out for the business or the recognition, I think that gets old and will catch up to you. But a lifelong passion and the servant attitude around that loving your clients and doing what's right for them, but having, you know, a passion about it because you want to continue to learn about it.

[00:27:34] Dan Rioux: So whether you're at the beginning or your 10 years or 20 years in, if you don't like learning about it, you know, it's probably not good. You want to continue to keep learning and things are always changing. So I would say that to somebody starting out or somebody that was 20 years in.

[00:27:48] Matt Goff: I mean again we're hired to be experts. Right? Whatever your expertize is in, I mean you should, you need to be able to deliver value and that means staying up to date on a lot of moving parts. It means having humility. I mean, the more I learn about my craft and my work, the more humility I gain. In the sense of I don't have the answers, but I know how to make decisions and move forward without having clarity.

[00:28:19] Matt Goff: And so I think that's sort of what education brings you. And then the other thing, this is just something I share when we're training new advisors or when we have interns here or something, this is something I've just picked up I don't know, 10 or 15 years ago that just has always helped me in meetings, I think just like we do, you do a lot one on one meetings with people and somebody just gave me a Formula one time, you know for those meetings that I always keep in mind, which is when I walk away from that interaction, from that conversation, what do I want my client to know?

[00:28:52] Matt Goff: What do I want them to do? And how do I want them to feel? So if I prepare for every interaction with know-do-feel what do I want them to know, what I want them to do, how do we want them to feel. Then when I walk away from that conversation, I can say that I shared the knowledge or advice that I wanted to share, that I did tell the client what to do that is in their interest.

[00:29:14] Matt Goff: I don't want to be shy about giving that advice if I have a great deal of confidence in it. And finally that I make them feel like I have their best interests in mind, that I leave them feeling like they are, you know, respected and loved and all those types of things. So I mean, I think that goes across all service industries and it's something that's impacting me in my career.

[00:29:36] Alina Trigubenko: Beautiful. Yeah, I know it is that both of you mentioned the word love how much you love the clients. And that's definitely something that amplifies that chemistry. And I'm sure that this is what we're all looking for in the professional engagements, love for the clients and love solving the problems.

[00:29:57] Alina Trigubenko: Because ultimately what your job is is to solve, sometimes unique, sometimes not so unique challenges for your clients. And it must be so much more fun with love about it. What is your advice on the things to focus on when scaling your business for other sort of professional?

[00:30:16] Dan Rioux: First, how do you do it right by itself without scaling, right? So I think sometimes even using the software world is the analog method. So having the process down right first before scaling. In my engineering background, I think automatically in systems and automation and things like that, and you can get ahead of yourself by thinking about scaling first. So I think before we scale, we got to think what is the right way to deliver it and can I even scale?

[00:30:46] Dan Rioux: Is it a scalable business? And then second, not always how do we do things, but who can help us? So sometimes it's not just the automation and the tools in place, sometimes it is, but it could be just the right people that could help us scale. The first thing I would say is what we're trying to do before even scale is let's get the formula.

[00:31:05] Dan Rioux: It's never perfect, right? But let's get it valued first before we even try to scale it. And then figure out can it be scaled and then what's the next thing and who is the who's involved?

[00:31:16] Matt Goff: I mean, you can sort of think of to two sides of the spectrum there, right? I mean, a centralized software application is endlessly scalable, you know, a highly skilled surgeon is not.

[00:31:29] Matt Goff: We're kind of something in between that. So I would say, understand your business and what are you know, what are sort of the limitation, limiting factors? What are the bottlenecks? Where are the elements that are actually scalable and what is not? We are not scalable, nor do we really want to be scalable to say a hundred thousand client families or something.

[00:31:52] Matt Goff: I mean, that's not practical at all. But we can be smarter about, OK, what are the things that make us more efficient and scalable and so forth? You know, specifically for our business or any business. I would just say identify what those are and be cognizant of what those limitations are and what you're trying to achieve.

[00:32:12] Matt Goff: So again, very different sectors have very different limiting factors.

[00:32:17] Alina Trigubenko: In the software world there is also a quote that we always repeat to do unscalable things first before you scale them, because again, services business is all about tailoring the experience and then you can replicate systems. So I agree on that.

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[00:32:34] Alina Trigubenko: We have a couple of questions here. So let's get to them. From John: What are the top one or two mistakes you see business owners make in their financial planning? How should we prevent them?

[00:32:48] Dan Rioux: So the first thing, especially working with business owners, the biggest mistake I see, especially when they work with young advisors, is that they don't keep enough liquidity in their business.

[00:32:58] Dan Rioux: And a lot of times, even if you think about a new business owner I know I was a new business owner and I came out of being an employee. So I had employee mentality still. And many of us are. You probably didn't come out of college and was an entrepreneur. I mean, many people are, but many people have had corporate lives beforehand.

[00:33:19] Dan Rioux: And so what comes along with that? Sometimes some traditional thinking and I go back to mindset, which is you were used to a 401K, you're used to saving money. You used to, you know, your health insurance provided for you and all these different things. And when you start even just making a little bit of cash flow, the tendency, especially if you have a young advisor, who doesn't understand small business and cash flow is king that you might be really itching to get back to that mode and you might have depleted even some of those savings.

[00:33:49] Dan Rioux: I mean, I know I have. What I mean by that is that we put money in places that small business owners can't access. And so I would say is we got to be really [00:34:00] understanding of what your small business needs or your business needs and not really be caught up in what the normal person does on the regular basis, which are mostly probably employees who have regular steady paychecks and assets and investments long term.

[00:34:16] Dan Rioux: So the biggest mistake I would say is putting money into retirement. Might sound weird coming from advisory but putting money into retirement too soon where it's locked up and you can't get to it soon enough because I've seen a lot of small business owners have to go back in and tap into that. The bottom line of that is not having the cash flow available to grow their business or like Matt said, to weather storms and be healthy in the moment.

[00:34:40] Alina Trigubenko: Thank you. From what I'm hearing about your approach, it sounds like you're 3 in 1; you're a financial advisor, you're a coach, because again, you're speaking about mentality as well as making people feel a certain way as well as do certain actions, as well you provide consulting. That sounds like a very holistic [00:35:00] approach.

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[00:35:01] Alina Trigubenko: Thank you for that.

[00:35:02] Dan Rioux: Matt, what would you say?

[00:35:04] Matt Goff: Just specific to financial advice, that's that's exactly it. Again, I go back to the advisor that only, you know, their only way of making money is to get your money into some financial product or account or something. That's the tension, right? Where literally Dan and his team would sit down and go, I mean would focus on the specific cash flow, working capital, all of those things and say you've chosen a different path.

[00:35:35] Matt Goff: You haven't chosen a path where you're an employee or an executive where you get a fat paycheck and can reliably put that money away. You've chosen a path that has wonderful set of opportunities ahead. But you have got to build the resiliency and cash flow to weather all the things that come. So cash flow is just critical.

[00:35:53] Matt Goff: I mean, I think all the data would show you that great business ideas, you know, there's the great restaurant that opens [00:36:00] down the street that everybody loves and suddenly they go out of business like what happened? It was always packed. Well, that was cash flow, right? So you just have to to really pay attention to that.

[00:36:10] Matt Goff: And then the other thing I would just say from experience, which is not specifically related to the financial industry, but just in general is because we work with so many entrepreneurs because we are entrepreneurs ourselves and have been through all of these things, is just you've got to protect yourself and your alliances and your partnerships and so forth.

[00:36:28] Matt Goff: You know, it's great to just to make sure that you're sort of keeping the interest aligned and assuming that, you know, it's great to assume that everything is going to go well, but you also have to protect yourself. And when you're, you know, forming partnerships and alliances and relationships and so forth that you agree ahead of time of what the exit from those agreements are, that doesn't put you into litigation.

[00:36:54] Matt Goff: We've just seen that over and over again and that can be so destructive. So if you just, you know, agree ahead of time and get it in writing, that's where we've seen a lot of pain and suffering that is not always necessary. Yeah, contracts and putting things in writing, I think saves a lot of lives. Thank you.

[00:37:15] Matt Goff: What would be your overall advice on securing personal savings with inflation? Priority number one, let's just say you had, a couple hundred thousand dollars of cash, right? I mean, literally, you just would need to understand, are there any circumstances in the next 12 to 24 months where you might need that cash to you know, bolster your business or make payroll or, you know, other opportunities.

[00:37:41] Matt Goff: It's strange to say because it seems so contrary that if inflation is running a call it 8% or so annually, that having cash makes sense but the kinds of investments, you know, one keeping your doors open in a downturn is [00:38:00] worth way more than anything you can make that's sort of any kind of normal public, market investment.

[00:38:06] Matt Goff: And then secondarily, just the optionality and the safety net. So number one, you just need to make sure it's not money that has any conceivable need. If you know that it's long term investment the best advice I can give in this environment, if you go back three or four years, the environment where interest rates were near zero, you were punished for holding money in safe assets like bonds or interest, I mean, or bank accounts.

[00:38:35] Matt Goff: They were paying you half a percent or, you know, 1% on the ten year, one and a half percent on the ten year treasury and you were losing money. It was ridiculous place to hold money at the time. The environment was pushing you into riskier assets. Stocks, all asset classes, real estate stocks, technology stocks, stocks that have no business being stocks like anything and everything just [00:39:00] sort of lifted into the stratosphere in that environment.

[00:39:03] Matt Goff: Well, this is sort of reversing. And so the less quality investment it is, say digital assets that nobody can quite explain what their role is in the world or companies that have no revenue and no profits and are only banking on something happening in the future. Those are the things where you're going to have the toughest time.

[00:39:30] Matt Goff: The highest quality assets are just, I mean, if you're going to park investment dollars right now, high quality assets, commodities tend to perform, real assets tend to perform well in these environment, again, if you had, you know, $100,000 to invest, you're thinking about, buying a piece of real estate in a city that is still growing and doing well or a stock that or investing in a company that has no proven product and no profitability and so forth.

[00:40:02] Matt Goff: In this environment, you need to lean towards the higher quality assets for sure.

[00:40:08] Alina Trigubenko: And the last question we have here so far is what has been the biggest mistake you've made as a financial advisor?

[00:40:14] Dan Rioux: I must speak from a standpoint of kind of building a team a little bit more on this question. I think the biggest mistake was not sooner, by the way, coming to the reality that not all people are built equally from an advisory standpoint.

[00:40:33] Dan Rioux: And the model that typically is in existence right now is that anybody can be an advisor, but the best advisors that are recognized in the industry, internal to the industry, are probably the best salespeople. They're the ones that can get and bring business in, but they probably don't deliver the best advice.

[00:40:54] Dan Rioux: And then contrary to the best advisors, probably the worst marketers so therefore nobody knows about [00:41:00] them. So they might be the most educated, but therefore they might be struggling. So like when you're thinking not thinking about that sooner you know, I think I spent a good 15 years looking for that unicorn person that was the person that could be a good salesperson, and advisor versus coming to the reality that, you know, that's two different types of people typically.

[00:41:21] Dan Rioux: And if we could have more team oriented advisory, like what we do in collaboration, like what we do at Ark Financial, I wish I just was smart enough to come to that sooner.

[00:41:30] Matt Goff: For me, it was just, early in my career I mean, you come in to into this career and you're inundated. I mean, there are so many financial services product companies the mutual fund companies, the investment banks, the insurance companies that are all willing to train you for free and so you sort of take their knowledge and so forth.

[00:41:55] Matt Goff: And I didn't early enough recognize that, you know, what the incentive was behind that. And until I started to push back and say, wait a second, this doesn't make sense. What I'm being told doesn't make sense. And so you know, several years into my career, literally just started to unwind everything that I've been taught and put it all to the test and build my own set of convictions from the bottom up.

[00:42:22] Matt Goff: And that literally changed everything where instead of parroting what some large mutual fund company or financial services company says about how you should invest, and just sort of parroting what I heard everybody else say I just sort of threw all that out sort of from the beginning, created my own beliefs and philosophies and convictions, and it came out to be drastically different.

[00:42:45] Matt Goff: And I wish I had known that earlier. I probably would have been successful. Earlier on in my career, I would just say, you know, push Not that it's all false, but much of it is. Much of it is taught for the wrong incentives and the wrong reasons and the wrong motivations.

[00:43:02] Dan Rioux: I think in both of our examples, Alina, it's we probably had to go through that, though, to get out the other side.

[00:43:08] Dan Rioux: We had to go through those trials and that learning and asking those questions versus just show up day one with the right answers and so it probably goes back to we had to learn we had to kind of learn these systems even if we learned them the wrong way first to come to the realization and have your own principles and beliefs.

[00:43:28] Dan Rioux: Like sometimes, a lot of times people will say, why do you believe a certain thing or something is right or wrong? Sometimes it's just compared to something else. So, you know, the standards that were set in our lives, you know, best will match talking about and, you know, learning enough about an environment or a situation or an industry or your occupation or service that you provide so much that you become the expert and you have conviction yourself.

[00:43:55] Dan Rioux: And you get confidence enough and to a point that you get confident enough to have those convictions. So we probably had to go through that to get to where we are.

[00:44:04] Alina Trigubenko: What I'm also hearing as like common pattern here is basically to always do your quality assurance, to always double check the information you're getting from the people you work with, double check the professionals you choose to partner, do quality assurance of who created the code in the software world of any indication that you're getting and always be asking questions, always be challenging your thoughts and beliefs which sounds like that's what you also do for your clients, too.

[00:44:37] Alina Trigubenko: Very interesting. Also because we have a couple of more minutes. I remember we had a very interesting discussion with you, Dan, about what are the reasons why clients fire professionals. And you provided a very thorough and very thoughtful list and one of them was around not having a clear communication.

[00:44:57] Alina Trigubenko: So I think that's also something very important. And if I can also throw in a question you, Matt, what do you think out of your experience? What are the reasons why clients fire professionals.

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[00:45:11] Matt Goff: I mean, I think it just comes down to expectations, right? In terms of what am I getting for this engagement? What do you owe me for this engagement?

[00:45:21] Matt Goff: Specifically in the financial services world again, there's this sort of perverse incentive built in that says: I'm going to charm the client long enough to get the money moved, accounts set up, money invested or, you know, whatever financial services and products are placed. Then that client now becomes very sticky because it's hard, it's a lot of work and a lot of effort goes into getting that set up.

[00:45:52] Matt Goff: And then suddenly that advisor is is sort of less accessible and then the client fades [00:46:00] away and is less taken care of and so forth. That's a very natural thing that happens. It's just sort of human nature. Right? And so we have to combat against that. But when clients get upset, I mean typically good advisors are not going to give like just really bad advice.

[00:46:19] Matt Goff: I mean, that happens from time to time. But if they're trained well and they're professionals, they're generally not going to give just really bad, blatantly bad advice. Usually it's: I'm ignoring my clients and they just get tired of it. They're like, look, I'm paying you a lot of money and you're not really doing anything so I'm leaving, that's what we see.

[00:46:39] Dan Rioux: I just would add a unique twist to kind of how we operate in Ark, which is we take responsibility for a lot of expectations. So our job is to build and lead strategy with multiple advisors on behalf of our clients. And so not only do we have to meet expectations of our clients, but we got to meet it for the advisors of our clients too.

[00:47:03] Dan Rioux: So we take on the responsibility of setting the right expectations with them, taking the responsibility that they're going to be accountable to deliverables even though we're not directly in control of that. So we although we do it and that's part of the responsibility and setting the right expectations for our clients and then being able to deliver.

[00:47:20] Dan Rioux: So the added expectations from dealing and collaborating with multiple advisors on behalf of clients is the other reason why it's something else we do. Probably a lot of business owners do that as well, taking on different relationships with maybe vendors if you have a bricks and mortar business where you're ordering certain parts and inventory, you take on certain responsibilities of delivering that to your customers.

[00:47:44] Dan Rioux: So a similar nature where you're promising something, even though you're expecting a relationship to fulfill its commitment to you and you don't really have control of that. But you know, that's part of business but setting the right expectations and communicating that and accountability is just being clear and having the right time and who owns things.

[00:48:05] Dan Rioux: And then, you know, making sure that we keep that communication open frequently because things happen. And so relationship is key in those areas.

[00:48:13] Alina Trigubenko: Yeah, relationship is key in the service engagements and the service professional businesses and partnerships. Fully agreed. I'm very excited to see you using Profi and seeing how we can amplify what you are already doing, all of the impact and all of the help and the peace of mind that you're delivering to your clients.

[00:48:34] Alina Trigubenko: So I'm very excited and honored to be partnering. And thank you so much for this vision, in depth knowledge sharing and the fireside chat.

[00:49:48] OUTRO

Thursday, August 25, 2022
12:00 pm
PT |
3:00 pm
ET |
8:00 pm
UK
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