Brian Hamburger on Surging Merger Business in RIAs

This is Master's in Business with Barry rid Holds on Bloomberg Radio.

This week on the podcast, I have an extra special guest. Brian Hamburger has been one of the leading authorities in the world of registered investment advisories, broker dealers, sec regulatory compliance. He is the founder of Market Council, which is one of the leading firms in that space, as well as the Hamburger Law firm. I know Brian for a dozen years, maybe longer, but I've really gotten to know him over

Persusse I wouldn't aagree. We also co invested in an investment recently where we should that's right, So I don't know if that closed yet has that clised closed last week?

So there you go. So now I have to disclose that also. So Brian is not a stranger to me, and we have some shared financial interests. But the reason I wanted to bring him in here is there are a few people in the industry who have a better perch by which to look at the world of registered investment advisors, broker dealers, all of the changes that are taking place in the space. And before we delve into that, let's jump into your background. You turned out to be

Quite frankly, the interest in finance started when I was young. My father was was an investment advisor, and he he made his way to be an investment advisor from being a manager with a textile factory to selling insurance to find his way out of that business. Went from insurance to financial planning, financial planning to the independent broker dealer world independent broker dealer to hybrid IBD slash Ria.

And so really you're saying he couldn't keep a job, constantly looking for a new game.

He made his way. He made his way into this space, and I was, I was captivated. You know. Keep in mind also that when I when I was going through school in the you know, mid to late nineties, you know, Wall Street was was pretty pretty appealing, bang and it was on fire. Yeah, pretty sexy. And so so why law school?

You go to university in Miami, why not go for a business degree?

So I did. I mean, at first I got out of undergrad and a degree in finance, coming out of coming out of a small college at the time, Quinnipiac College. The gigs I was offered were essentially customer service jobs at mutual funds, you know call service, you know, manning the phones, which I was no stranger to, you know, work my way through high school and college on the phones, but was uninspired by that work. I didn't see the

The time with a little bit of information buried in the back, but the front was was the narrative, story was compelling. Yeah, and how could you not put money into this common right?

So she she she puts these annual reports, and she said, I want you to look at the management in the and the board of directors, and I want you to tell me what they have in common. So we're at We're at dinner that night, and she said, did you look through them? I said yeah. I said, I'm good with my auntser, I'm ready. She goes, what are they have in common? I said, they're all white bald men.

And one day I'll be a white bald man.

And she said, that's not that's not what I wanted you to get out of it. But was tough.

She she wasn't falling around.

With I thought she wasn't falling around.

She was looking for the answer they all went to law school.

They all went to law school, and they and they didn't necessarily pursue a career purely in law, but her her understanding of it is they must know the rules of the game better than others. And so that really that really stuck with me. And they know the rules of.

The road better than others. That's really insightful. What did grandma do that she had such market savvy back in the nineties.

So my grandma Nan and Sophie, she lost She lost her husband at a young age before I was born, and her husband ran an autobody shop. They were first generation immigrants, and when faced with the typical widow dilemma, she stepped in and said, I'm not going to sell. I'm going to run this business. And so to this day I continue to meet some old school mechanics who knew my grandmother when and they said, man, she was a tough son of a.

Really yeah, and I've been having a hard time chasing down an old nine to eleven turbo the charger. Can she can Grandma hook me up?

So she's unfortunately passed away for many years now. But you know, I had some really, some really good strong women in my life. My other grandmother was another first generation immigrant from Germany, and she she took to selling beauty supplies on the side, and before you knew it, she was the number one salesperson for the uh you know, uh selling to professional salons in the whole country. So I learned a lot from from young ladies.

That's quite quite interesting. So one of your grandmothers steers you towards law, when did you kind of realize, Hey, I can make law and finance work well together, and one plus one is three.

Yeah. So I don't think there was that necessarily eureka moment, but I was definitely informed by my father's study groups. You know, I knew his network of friends and colleagues, and I would constantly hear them frustrated by the compliance department, right, right, they were just playing compliance for everything they couldn't do.

The Bureau of Business Prevention is how the retail brokers used to describe compliance.

I think many still do, right. They know that the answers know, but they don't know why, right, And they don't really don't care to know why. And it just struck me that it can't be all that complicated. And so when I would look into why certain of their marketing materials would get declined or certain of their business requests or authorizations would get declined, and I would share it with them. We would sit down and figure out a way around it, right, a way to deal with

I love the puzzle.

Well more than the puzzle. I love coming up with a solution when they can't even formulate the question. Huh right, So it's like it's almost like pulling it out of them and asking what the problem is. And I've always been drawn to that, and so to me, you know, that really helped. And then early in my early in law school at a professor and adjunct professor. I think some of the best professors in college are adjunct professors.

They're working actual career in the industry and teaching part time.

Absolutely, And I was fortunate that this professor, Chuck Senator, was during the day the head of enforcement the in Miami's SEC Enforcement Division, and so I started to see, you know, what he's done with his with his law school education. Chuck went on to be general counsel for small firm like Fidelity Investments and Aim and I. Him and I are still in touch to this day. But it's people like that who who take the education and really make it their own that that really really inspired me.

So let me throw a compliance question at you, because you're making my.

You want free advice?

No, no, no, I want to talk about the industry. So I always assumed the reason compliance departments always said no was simple game theory. There's zero upside for them saying yes. The best that can happen is nothing goes terribly wrong. The worst that can go happen is there's a big problem, and why did you approve this? So internally, there's no incentive for them to do business until they stop so much business that some senior person has to come in and say, hey, you got to loosen the

You are very correct, and I'm not going to tell you that that often. But the root of that is this big misnomer. It's this it's this word compliance that major firms have used because it's a good catch all. Right.

Risk, compliance, legal and risk. Those are three very very distinct issues that sometimes get lumped together as a lazy way to say no exactly really intriguing. So clearly you see the overlap between being an attorney understanding the intricacies of securities law. I'm going to use a dirty word now, how did you come across the synergy of combining a law firm with a consultancy that specialized in compliance and regulatory supervision?

Has that become a dirty word?

Now? Oh? In the M and A world, it's the worst word you can use, really, because it means we don't really know why we're slamming these two companies together other than the fees, the banking fees. So let's say there's synergies here, and we'll all go out for beer. I mean that's kind of how that word became a dirty word. It was a substitute for actually thinking about how do to disparare things? You know, how do you get to that one plus one equals three?

So we'll just assume that that that's going to work out instead of doing the analysis. Got it?

So yeah, I mean, I don't think that's that far from the truth.

So what I realized is that people were intimidated by law firms. My first job out of law school was at a mid size law firm out of Prince in New Jersey, and I would have clients who wouldn't call when an issue arose.

They're afraid of getting built.

That was it, one hundred percent? That was it? Because I would ask them after the fact and they would say, you know, honestly, I didn't want to run the clock. I said, that would have cost fifty dollars. We would have been done with this.

You know. I didn't want to tell you what you guys hit me for. Every time I met a phone call. I thought it was no, you guys were pretty fair. But that is a legitimate concern, especially for a small firm that has a modest budget.

Absolutely, yeah, So in my mind, we had to do something democratize regulatory compliance without diminishing the quality of work. Because when I started Market Council and the Hamburger Law from back in two thousand, the only firms that were doing regulatory compliance work were registration services service bureaus. Right, it was a very much a next available operator. Former

So how many companies, and I'm actually literally researching as we speak, how many companies do what Market Council does or some partial approximation.

So I don't think there's anyone that has the breadth of services that we do. Other firms have launched in the past as affiliates or related companies to law firms, but they really they've either sold off the compliance business so they're no longer affiliated, or they really do they do completely different different work. It's really just a referral relationship, you know. With us, the law firm is basically a customer of Market Council for a lot of our startup work.

So when you say startup, it's a new firm that's stepping out to launch a new company, and they need to go through the whole SEC registration process unless they're small enough, in which case it's whatever states they're operating in. They need to set up their policies and procedures. It's just all those initial painful, tedious, difficult things. I mean, we're only not even a decade out from launching hours and I remember it was a pretty painful set of circumstances to get up and run.

Well, yes and no, right, I mean so, so Market Council Mark Council Consulting will work with firms on really understanding their scope of services, taking inventory over their conflicts

For meaning coming from a broker dealer or another RIA. And that raises a question as to some of the technical legal employment issues around their exits.

So yeah, there's definitely issues with their employment and employment transition, right, what canon they can't do while they are currently gainfully employed elsewhere. Right, That captive employment restricts them often far more than they know. But they can engage in an outside business activity, right, they can engage in selling away. The big one that they get hung up on is they can engage in a private securities transaction without getting

They're launching a new firm that's sec regulated.

Doesn't even matter if it's sec regulated. The fact that they are, let's say, in preparation for launching this new firm, they are acquiring one hundred percent of the membership interests of an LLC or one hundred percent of the stock of corporation.

Can't you disclose that at the last minute and.

No prior written consent of the firm you're working? Oh, so you can.

That's technical, isn't it.

Well, and it's enforce right, and so you can decide that you want to sever your employment and then begin the startup work. But that's not tenable for the most.

Six months, then, so how do you never? That seems kind of an absurd set of rules. That prevents people from leaving a firm if or, I guess you could always use a straw up man. You could use a third person to set this up and then hey, I didn't decide to do leave until the day I resigned, and my wife did all the work. It's on hard. Does that work?

Unfortunately? No, But there are strategies that we do deploy in order to make that work. And it doesn't work for a whole variety of situations, depending upon how restrictive their current employment situation is. But when you say you know, that seems awfully restrictive, keep in mind these are rules written by a self regulatory organization comprised of broker dealers or looking to create a moat.

So you launch both Hamburger Law Firm and Market Council in two thousand, that that's some timing. Everything's going to hell. The dot com implosion is happening, the Nasdaq falls. I think it was eighty one percent peak to troth. What was it like launching two firms into that mess?

I was dumb and young, right, I mean.

Well, that's the time to be dumb when you have you know, recovery period.

Absolutely, you know I had and.

Let's talk exactly how dumb you sold your house to fund this? Is that true?

I did, I did, and I'm to this day, I'm grateful to my former wife for supporting that decision and actually coming up with the idea.

It was her idea. You were both all in, let's let's sell the house and see what sticks against the wall.

So I came up with this consulting concept, and I pitched it to the firm's partnership and I said, I said, I really think that we would be able to do a great job for our ria clients, for our wealth management clients by having this consulting firm. And they rejected the idea. And I would come home from work and crack open a beer, sit on the back porch, and I don't do that every every day, but I did it coming out of work there, and I would punch the pillow in the morning.

I was just, why did they reject the idea? What was the explanation?

Law firms don't do that now. Okay, two years later, twenty two years later, we see that law firms now do that. They just didn't do that in big numbers back then. And so so she said to me, she said, well, are you just going to keep doing this?

And I said, well meaning punching the pillow.

Yeah, meaning punching the pillow. And I said, it's probably my best option right now. And you know, we looked at our situation. She was pregnant with our first with our first child.

And we were that's the time to quit your job and sell your house.

That's the perfect So she said, well leave and I said, how are we gonna do that? We just bought this house and she said if not now, when?

So not even like a second mortgage, sell the house and use that to fund the news.

We had to sell the house. We had to do a for sale by owner because if we sold it using a broker, we would have been way underwater. So we literally printed up flyers, put them outside, put them all over town. We sold our house we have. When I went to launch this firm, my daughter was six months old and my wife was pregnant with our second. We had two large dogs. Well and behold, no one wanted to rent to us, so we ended up we ended up renting a log cabin on a vineyard in

Wait they're a vineyard in New Jersey. That's the news New Jersey.

Yeah, I can't read that many.

I can't recall my last New Jersey bouchelet. When when is that harvest?

It was it was a lovely place to live for a short period and yeah, we uh you know, we were all in. We literally sold the house to finance the bill.

Wow, that's a crazy story.

Yeah.

Prior to twenty twenty two, when rates were cheap, when rates were zero, when capital was plentiful, it seemed like the entire industry went through this wild merger frenzy. I thought twenty twenty two would cool it off. I mean, it seems to have slowed a bit, but it's not like anybody through a bucket of ice water. What's going on in that space today?

Listen. I think it has slowed, and I think interest rates are going to be probably the you know, the biggest, the biggest driver there because, as you know, right, the capitol becomes more expensive. But you know, what shocked me more more than the slowdown, the slowdown actually makes sense. What shocked me more than the slowdown was the intoxication of capital, right, and the fervor in which you know these these firms, private capital has been chasing investment advisors.

So I have a theory as to why. I'm curious as to why you think that that fervor was there.

You know, I think that I think that there is a strong investment thesis as to why to acquire these firms. Right, we joked around about synergies. Before they talk about synergies, they talk about economies of scale. There's this foregone belief where people just like to jump to the fact that that there is some type of scalable client experience out there that's really special. People don't necessarily describe how to get there, but they just say, with more resources, we

So let's take that apart. So, so there's really two issues there. The first is all the private money flowing in. I always looked at the private capital rushing into the RIA space, especially with so there are a couple of different types of firms. A small firm that you know, is a very nice little lifestyle practice. Then there's the medium firm that's been a decent chunk of capital but for forever. They've been around for twenty years. They're almost

It's better than that. Actually, oh really it's I think that private capital likens it to an equity indexed annuity right where there's no downside because they put in a pick, they put in a preferred income clause that gives them the ability to get paid first, So there's no market downturn risk, or I should say very low market downturn risk.

Now, now you let's talk a little bit about the roll ups and the mergers and acquisitions that are going on. So for there's no doubt in my mind as having run affirm that was ninety million an assets, the one that is coming. We're three and eventually four when the last deal closes. Billion dollars is a lot of a lot of assets graduation. There are well a lot of work still to go, but there are clearly economies of scale and ik, You'll give full credit to my partners

It's a good call.

Hey, hey, we need a head of HR because you know, we need to hire people. We're not hiring them fast enough. We need to make sure that nobody is saying or doing anything that doesn't comply with the rules. We're in twenty seven states. There's a different rule in every state. And I'm not even talking about the crazy this will get your canceled stuff. I mean just staying on the right side of regulator, and on and on and so, yes, there's no doubt scale helps, but it doesn't help you

I see. I agree that scale helps, But what does scale help with? Scale helps with reducing the complexity that's largely come from growth, right, right, So it's it's a drug, right you. I mean, if you want to grow quickly, you need to capture that scale in order to combat the complexity that comes with that growth. But for the for the advisor with a few hundred million of assets

No, But it's a fair question, right, But why do you want to grow? If you're running a nice business, you're happy, your clients are happy.

If you're happy, if your partner in life is happy with you, and you've got time to spend with the people you love, If your clients love what's going on, if your employees are well cared for and they love working there, you know is growth and imperative. And if you read the trades, you would think everyone has to grow. Right, You're gonna grow or you're gonna die.

Right, And now there are literally roll up shops that have I've sat in the I never sit in the audience. I'm usually in the green room. But if I'm sitting in the audience and someone comes out and says, grow or die, we're a roll up. And if you're not going to be part of the roll up strategy, you're gonna get steamrolled. How much of that is just self interest talking.

My opinion is all self interest? Right? If someone listen, you always start I always start at bottom of the article. I always look at the italicized print, right, just like you started with the disclosures at the top of the sh show right, start with the atala sized print. If I'm here from a roll up or an aggregator, and I tell you, now's the time for you to sell

I can't hear what you're saying because what you're doing is speaking so loudly.

You are so much more eloquent.

That's not me. I stole that. That's a Longfellow or Wadsworth or somebody.

I know.

I know I'm stealing that. My dad used to say that to me all the time. It's a great one, but really it's true, which raises the question how big is that? M and a market for ri as? Shoot, nobody has. Here's the crazy thing. So you take the five biggest rias you can think of, they're all two hundred billion Creative Planning, Edelman, ken Fisher. They're all giants. I'm sure there's a couple more there. Two hundred billion dollars is nothing in a thirty forty by some measures,

So you have you have a few questions, Yeah, you have two questions there. The first one is we're in the early innings, right, because even the giants of independent wealth management are small in comparison to the entire securities industry. Right, it's not. It wouldn't take much for one of these financial behemoths to become an aggregator themselves, and they've got far more financial might than any of these private capital providers out there.

Note have gone public yet, right, they're all still mostly private, Is that right?

Well, I mean you had focus financial, right, so you know, go public and.

They're clearly a roll up there. How big are they They're like three four hundred five hundred billions?

Yeah, I think, but they're they're actually going they're leaving the public markets, and you know, it looks like they're you know, they're heading back to private. So that's an interesting transaction, right. One of the few firms to make their way into the public markets is actually you know, some would say retreating, you know, others would say, you know, recapitalizing within the you know, the private markets, but you know,

Really, so let's let's that's surprising because when we launched our firm in twenty thirteen, I felt like we were a decade past the real launch of registered investment advisories. We were on the right side of pass if, we were the right side of fiduciary. It felt like, all right, this is the future. And that's why I was surprised the big shops hadn't bought on yet. But you're saying, and here it is almost a decade later, you're saying,

I believe that's the case. Yeah, and then you said, you know, are there going to be dominant you know players in the space, And I don't believe there ever will be, really And the reason for that is because there's such a low barrier to entry. Right. Anyone you know who takes a nice, hot, long shower, you know, has an idea, right, and most of those people have the wherewithal the pull off.

I told you that in confidence, most people.

Have the where with all the pull it off. Within the independent wealth management space, right, there's not a high barrier to entry. There's not significant licensing, you know that that takes place and with the help of an objective advisor. I mean, this is not a very complex endeavor.

So you mentioned Focus Financial. Let's talk about the platforms like Focus, like Dynasty. Schopenny was a guest of the show a couple of years ago, has a fascinating personal story. I think they're down in Saint Petersburg or Tampa. These platforms have developed. High Tower is another one that essentially exists to pull out these billion dollar teams from big firms and have been doing so very successfully. What is that sort of transaction like and how challenging is it

Well, the billion and a half walking out is happy, just to be clear.

Nobody who's left behind is happy.

So I think the three examples you gave are three really different examples that probably satisfy a similar utility, a similar need or demand in the marketplace. When you look at at firms like you know, like Dynasty, right, they're

I want to ask you about some of the deals you look at and review sometimes after the fact. One of the risks of being an attorney is people will always come up to you and ask you about a problem, and then two thirds of the way through the conversation you find they already signed that document. Oh I'm sorry,

So you asked me before about the different practice areas we have, and that happens all the time within our Business Transactions group. Really personally, like, where I spend my time is really in two primary areas, and in my practice, one is having that ongoing relationship with CEOs within this wealth management space and talking to them about their objectives and helping them navigate a path so it doesn't happen in those circumstances. The other part of where I spend

A problem someone says, hey, I signed this, what do I do?

This becomes a problem, right, And it's actually typically it's like an LOI, right, So it's not a legally binding document, but it's a good will problem, right because we worked with so many other of these firms within the space. Bye, by the advisor signing that l o I, it's it's really the equivalent of a handshake, right, right, And if you're going to be in business with this firm for the next few decades at least. You don't want to start off by your attorney calling saying, hey, I know

Right under the bus.

We get that all the time.

And that's fine, Hamburger. It's his fault. We had a deal, we had a handshake until Brian came along and saved me from myself.

Perfectly, perfectly fine. But usually my job is to call up the CEO with the counter with the contra firm and to say, hey, I know, you guys slipped one, you know, by the goalie on this one by Yeah, I said, you know. And and it's almost always met Barry, We laughed, they know, it's almost always met with Oh, we had no idea that you were working with them. Of course, it's not a problem.

So that's hilarious. Yeah, because I can't tell you how often somebody will mention something and it's like, oh, I'm a car guy, Hey what do you think of this?

Oh?

You don't want I've learned not to say you don't want to buy that.

You don't want to touch that.

That's a poss bought it last week, right, and that's always the answer. Oh it was just delivered. Well, you know, send your mechanic a Christmas card because you're going to be spending a lot of time with him, you don't. I've learned not to stick my foot in my mouth after having done it a dozen times, so you can. You can work with people to erase a bad LOOI what happens if someone comes to you and said, hey, I got a phone call. All these people offered me

Listen? That doesn't always, That doesn't often happen. You know what what often happens is they come to us with this deal, and my first call to them was I didn't even know you were in the market to sell, right, right, like we and and and by the way, the one firm that you're talking to seems to have none of the qualities that were important to you when you left

It's more than just dollars. There's there's a lot of other factors that make a big difference.

Because most advisors don't think of the fact that they're going to have to be employed by this firm right afterwards, like this is not a one time transaction. I think the other big misnomer that's out there is people are fueled by these headline numbers, right They're they're looking at these headlines. This firm sold for you know, eighteen x. This firm just sold for twenty x, and they don't

Right, If the LLC passed through, especially if you're in New York, a California based is a big advantage versus you know, traditional C corps or whoever else people are doing it in other states. I love hearing people say we are absolutely not for sale twenty x really, let me get back to you on that. It's It's funny how money is an issue until suddenly it becomes becomes an issue.

See old Robert Redford quote. Right, everything's for.

Sale at a indecent proposal. Very good, Demi Moore, I don't remember who her husband was, what Harrol's that's right, that's right. So let's let's talk a little bit about some of the fun terminology here. Teams, new launches carveouts what's going on in those spaces.

So you know, the interesting thing with with teams these are these are people who are typically employed by a brokerage firm. They have worked together for many, many years. They are under this false belief that they're partners, right, they're co employees, they're coworker. Yeah, they're colleagues that are often seated with, you know, next to one another. Often they have like some type of fee sharing arrangement among them, right,

So, in other words, until there's a partnership agreement, nobody's a partner.

No one's really a partner, right, right, And so what we try to force them to do is really get to know one another because within this team are a whole bunch of different dynamics. Right. Someone needs to come clean that they're on the precipice of getting a divorce. Right. Someone needs to come clean that their financial affairs are just in complete disarray, right, Which when your colleagues in

A business and there's a oh, I got this back depending, but don't worry, it won't affect what we do.

What makes the hair go up on the in the back of my neck is when we get off we're about to close a call like that and one of the people that are on the call will say, hey, Brian, can you hang on the line for a minute. Uh uh, I know what's coming. Every single time it's a it's a prior felony conviction that they haven't disclosed, or sometimes.

Matter if it's out of the United States, like a felony in South America asking for a friend, Yeah, yeah, just asking for a friend.

The Uh, you know they want to talk about marital issues and uh, is that any way one? But yeah, yeah, is there any way to own this without you know, while protecting it? Uh? They want to talk about the state issues. So anytime that there's that type of divide between would be partners, big red flag. We have a whole service protocol to try and make sure that we can diffuse that. And you know that's not our information to share, but it needs to be shared.

How often did someone come to you with a proposal and you look at it and say, I just can't let you sign this. This is not this is not a good deal.

You know, I'm from Jersey, right, so we we can't not share our opinion. It's part of our it's part of who we are, It's how we're brought up. But I won't say that. What I'm going to say is I'll say, in a polite way, I'll say what are you thinking? Right, because I'll say, like, what were your objectives? You know, what do you think that this are?

You're going to finest your way around getting to this is a bad deal?

I mean, come on, you know our colleagues in this industry, right, they're very prideful group. Right. Some may say that there's a big ego about them, and they're you know, they're used to being the smartest folks in the room. And what shocks me more than anything else that we've talked about today, what shocks me is how great investment advisors lose their when it comes to the securities analysis of their own security, right.

Because there's no objectivity, they can't separate themselves.

Right, So you know this, I mean, really, at the end of the day, what do you own? You have a concentrated securities position, right, right, You better than me as the investment advisor, can analyze the value of that security, right. You have all sorts of methods for doing that, and so my job is to is to redirect your skills to be able to do that. And most of the time they see that.

So so let me ask you this question because I'm genuinely aghast. We talked earlier about people not making the phone call because they don't want to run up the legal bill every now and then. I'm horrified to see people not have attorneys, not have accountants sign documents like how much are you saving? You're talking about millions of dollars in revenue, tens of millions of dollars in revenue, millions of dollars in salary. How can you sign a

I too share your sentiments. I mean, you know, of course I'm biased. I think that I think you should never go into a novel financial transaction, particularly one that capitalizes the decades of goodwill and trust that you have developed throughout the course of your career without number one, an objective party, right, even if that's a knowledgeable friend of yours to say, what the heck are you thinking? And an experienced party, right, someone who's been there before

And you know, and this isn't just self interest speaking because the odds are they going to go to a different attorney than you. Sure, just statistically, But if you're signing a contract that's worth millions and millions of dollars, isn't it just common sense to have an attorney look it over. I mean, I'm genuinely aghast when I see and hear about these things, and it happens more often than one would imagine. And it's not like you're a minor. It's not like you're going to be able to get

So here, here's the distinction that I've been able to call together over the years is that people that think of this as an investment, people that think of this as a business, are apt to spend that money. Sure right, they say, Hey, there's a transaction cost, and it's making sure I have good counsel to help optimize the transaction,

But but you would hire an attorney to buy a house, right, You wouldn't just go in and do the closing. Yeah, I could figure it out.

But that's only because your realtor sent you to someone who's charging one thousand dollars to do the closing for you, right, It's not really because you would have found them on your own. Here right, when you're saying this is what objective counsel is going to cost, that's a tough check to stroke, so less you're thinking about the brighter right right.

I guess if you're sitting in a place where you're not paying for legal, you're not paying for compliance, you're not playing for marketing, you're not paying for trading, you're not trade execution, you're not paying for any of that. It comes out of out of your gross revenue on a grid, So you don't really recognize that these are actual costs. I mean, giving up half of your comp or more to pay for that. I would think that's intuitive,

Those small RaaS will be here throughout the duration of our lives. And the reason for that is probably not what you think. The reason for that is technology. Is technology, okay, yeah, because what you could do as a as a solo practitioner or two or three people working in an office today is just so much more expansive than what you

Salesforce is a big giant company. There's a dozen of them for rias.

But to stand up a CRM twenty years ago, to stand up a CRM like a salesforce, right, you would have to buy a dedicated server, right posted in a cooled office, right.

Have have replicate the data, manage it.

Right. Yeah, you have backups all over the place, right, you know, backup tapes and all this, you know, crazy stuff. Now you buy a license and that's it. You buy a single license and you log in and you start to configure it. And so the scalability of technology, the scalability of telecommunications is the game changer, right. And I don't think too many people plot out the acceleration of the independent, fragmented wealth management business with the prominence of

Huh really quite fascinating. Tell us about your practice. What is the thing that keeps you most busy? What are what are the other areas of practice that someone who says, hey, I want to set up a registered investment advisory, I have half a billion dollars in assets. What what is the thing that keeps you most active?

So you know, we talked earlier about the work we do within Market Council Consulting, our consulting firm, But most of the time I'm spending is personally is Within our law firm we have we have three distinct practice areas. One is regulatory, where not only do we uh do we work a lot with with advisors on various legal matters, but also regulatory interactions right working with state and federal regulators on anything that rises beyond a simple examination. The

So, if I'm in a right to work state, how challenging is it for me in the finance industry, either as a broker or a trader or a fund manager or an RIA to say, Hey, I want to switch and go somewhere else.

You know, it's funny when I describe the employment arrangements or restrictions to people outside of this industry shocked. They think I'm making it up. They think it's a story, and I don't know. I think there's more interesting stories to tell than that. But it is beyond comprehension for

Right.

These restrictions are.

Real, right, and they're being found to be legal.

And they're found in varying degrees found to be enforceable, right, depending upon the reasonableness of the restrictions, the states that we're going to be dealing with these restrictions in and you know, and that's how enforceable they are. But we also have to look at the firms that they're leaving. You know, what's the reputation of the firm for actually enforcing the terms of those of those contracts.

So we hired some ones from a major wirehouse and I got this like sieving email from general counsel. I picked the phone and go, dude, what's up. We're a member of protocol. He's like, oh, sorry, I don't worry about it, just deleted. Can you send me an email confirming here? Yeah, yeah, no problem. I mean, it was savage to h no worries mod It was just like

So the Broker Protocol, I mean we should first probably say that before the Broker Protocol, the industry was a bit of a Wild West, right, free for all. It was a bit of the free for all, right. People were leaving to go to firms. In fact, I was in I was in court in the Southern District of New York, federal court, right because all these are handled in federal court. And I watched a firm go in front of a judge and say this broker should not be able to leave and solicit its clients, and here's

Right. My partner Josh calls this a prisoner exchange, like guys from UBS go to Morgan, from Morgan to Merrill, from Meryll to JPM Chase and then and then back to UBS. It's literally everybody is chasing a signing bonus, which, if you have a decent amount of assets under management, can be millions of dollars.

Right. And so from a distance, right, this looks like indentured servitude, right, or this looks like that we're trading human chattel. Right. Both things that are you know, completely illegal and way outdated. You know, not only in this country but in the world, but in the securities industry. There were still shades of that up until the Broker Protocol and maybe still in some pockets.

When did the protocol first come out?

So protocol has been existing since the mid two thousands, right, And it's a limited forbearance agreement that that effectively says if if a firm is a member of the protocol, they agree not to enforce certain terms restrictive covenants that

And somehow this escapes anty trust provisions somehow. I mean, shouldn't it be like, hey, you guys are creating a little oligopoly here.

Somehow this deal that was concocted, you know, on the back of a cocktail napkin, you know, seemingly amongst four global titans you know of there's.

No price fixing, So I guess it it escapes that way.

The so so it was actually our first argument. So we were the first firm to add an r I A to the broker protocol. Oh really, And the administrator at the time said, uh, he called me up, sir Brian, you can't do this. It is not is not for RA.

As which administrator it was of which the which government agency?

No, No, no government agency. They just appointed a voluntary administrator within Yeah, there's no FINRA, there's no sec oversight this.

This well, let's see what the judge has to say speaking of anti trust.

So these four founders, right that you know that concocted this, uh you know, this this three page agreement. They say, this is not this was not meant for arias. And I say, well, you know, then it seems like we have a legal problem because it seems like you guys are creating a moat and this seems to be an agreement.

To restrict competition in the space of providing financially.

Absolutely, and so I said, so, I guess we're gonna have to you know, we're gonna have to then deal deal with that. They thought again about it, and they said, you know, on second thought, we're okay with the RAA joints.

As opposed to a judge thrown the whole.

Thing out right because they never they never defined the term, right, broker, right, like, I mean, we know what a broker is, but they never defined the term. I mean, arguably a car wash can join the broker protocol, right because it is like a prisoner exchange, right, It's it is, you know, it's it's very much a protocol. And so coming off of that, you know, thousands of RaaS have joined the broker protocol, and they are beneficiaries. Since they're often the RaaS often

And I suspect capitalism supports that that you want competition in the marketplace for talent, you want the ability to become more efficient, more productive, move around, go where there's the best deal. It's almost you know, any other industry, it wouldn't even be a question.

It wouldn't be a question. And I'm smirking here. I can't see that on radio. But because there's a running joke within the space, there's a gathering each year that is assembled by a leading labor employment firm in the space, and they bring together probably about one hundred practitioners who focus on employment law within the securities industry. And for many years, I was the only independent representative that was coming that worked with RaaS that would come to these meetings.

So there was still members by accident.

Well, the the the they announced, oh, you know, our o mission. But they're suddenly, you know, withdrawing from the protocol without the requisite notice. And so yeah, you know, we've been we've been advocates of of not only having the protocol UH, but making sure that the terms of the protocol are enforced, that there's no gamesmanship within the protocol.

And what's the what's the game theory for one big firm with drawing from protocol? They that confident that because I know one of the provisions is no rating. You could take a couple of people, But you can't decimate an office. Sure, now that they're no longer involved, Hey, you're back to the wild West, let's go, you know, pillage Morgan Stanley.

Well, there's still no rating, right, So the limitation on rating doesn't em any from the protocol. The protocol just doesn't protect you from rating.

Oh okay.

So I honestly think that some of the larger firms that are in the protocol are there as a matter of pride. I think that if they were to withdraw, I think that their advisors would see that as a sign of defeat. Really, I do believe that. I think that's one of you know, that's one of the theories. And I've spoken to executives at some of these large firms and they said that the optics around withdrawing would be would be terrible. They also believe that there's a

So let's stay with this. I'll circle back to m and A later. So first, full disclosure, I've been wrong about the brokers industry for thirty years. I've been saying I don't see how they don't collapse under the weight of their own fees, churning underperformance, and the lack of a fiduciary standard. To me, it just makes more sense that your financial planner should be more like your attorney than a used car salesman. But that's starting to change.

What's changing, So what is changing.

Is the big broker dealers kind of figured out that the compliance nightmare and the legal nightmare of transactional business is so much harder than Wait, we could just charge a fee for managing their money, not sell them bs syndicate or not sell them IPOs that maybe they work, maybe they don't. The good ones all get sucked up by the institution, so the junk that's left will stick in MoMA. Those are all ticking time bombs. Let's just kind of go semi passive, keep it low key, and

So now that you're dealing with the reverse churn, right, you're dealing with you're dealing with clients who are paying a fee.

Went from churn and burn to net and forget it. That's a good way to keep it, keep it running. Although that really to be fair, That really isn't isn't isn't fair because I know plenty of guys that are and men and women that are arias at big So I've been slagging everybody, so let me, you know, throw a compliment. Plenty of people at big farms do really nice work on behalf of their clients, mostly operating as arias. Every now and then they take off their RIA hat,

So a couple of things on that. First of all, the way these sophisticated organizations do is they win a multiple fronts, right, because along with what you're saying here right, as they've evolved their product, they've they've mitigated risk, they've also engaged in some sleight of hint. Right. So where advisors are subject to a foot utree obligation, would you know, right, that means they have to act in the best interests of their clients.

Which seems pretty instinctially how you want your financial advisors.

You would think, right, But then then they get blessed and they get they get blessed by the SEC on this notion of a best interest standard, right, which is not a fiduciary not a fiduciary standard.

You can call it what you want. It's it's black or white, either you're a fiduciary or you're something else entirely.

But it just coincidentally has the two core words that define the fiduciarye standard. Right.

I mean, this is where I go on a tirade as to hey, liars are going to lie and there ain't nothing you're going to do to change it. Like I want to give them the benefit of the data. I know you do, but I they just keep disappointing.

But here's the distinction that I think will and it'll help you with your segue over to M and A as well, is that I think I think financial advisors, whether they are brokers or advisors, are largely an amazing crop of people. I think almost all of them are in it for the best of reasons. I think we have a high degree of success in the industry. People make a really fine living and they're doing good work.

Program, they won't have it both ways.

The question is the legal standard of care. The question is are the products and they're pure? Is there a cash threshold in there where they're scraping money off the top? Right, Because at the end of the day, this firm's management and their board have a fiduciary obligation to who the shareholder that's right, right, And that's the biggest distinction that we have between traditional brokerage industry and the wealth management industry, and that's changing.

How is that changing?

Well, I mean M and A has come upon the wealth management space. You know, there's there's hysteria right when when it comes to M and A, there's there's a real lack of logic that's out there in.

Terms in terms of who's getting put together or the price is paid or what's the hysteria?

Yes, all of it. Yes, I think that I think there's been an influxing capital into the space. Investors see this as a as a safe investment, right, but one with with significant upside, right like any other self regulatory.

Oh so when you say these are these are finner rules, these are my attitude has always been they could go leap in a lake. They have no regulatory authority over me. Who gave up my seven? And every now and then I get a request from FINRA and I pick up the phone and my compliance people aren't happy, but I let them know what I really think. I've written what I really think. A whole decide that they were probably the single most corrupt organization in finance when it came

You are not overstating it. It is how a lot of people felt. The organization has evolved a little better, haven't that? But it hasn't gotten better on the whole. I mean there are areas where they have improved. The arbitration process has gotten better.

By judicial decree because it was found to be third world corrupt. Again, am I exaggerating?

You are not exaggerated, just like, oh.

This is legalized theft and we're not going to allow this nonsense to go on. You can't do this anymore. You can't own the arbitration companies and mandai an arbitration go there.

So you're absolutely correct with regards to the arbitration. But keep in mind you said, well, if I if I leave FINRA, right, if I no longer am a broker, and I decide to go fee only, they can go pound sand.

But they're trying desperately to get in there.

Well, but when you sign that U four, right, you gave them jurisdiction over you for two years.

After I never signed the U four, I just walked back.

No, no, not to you five. When you sign your registration, oh the original use, they have jurisdiction over you. That's so. Yeah. So so there's a two year period of time after you resign where they continue to retain.

Oh no, I dropped the seven two years before I resigned because I didn't I wasn't doing any brokers.

Work well and so and so a lot of these restrictions are tied to the fact that these folks are leaving broker dealers, right, and so, yeah, these are fin rules.

Now listen that that seems like that is a class action lawsuit waiting to happen. Close. That whole setup is borderline employment restriction. You would think like a state like California would slam that stuff from going.

On, except that states like California like the fact that broker dealers have that level of supervision and control. Right when it comes to protecting investors.

Because again, the nasd R did such a great job protecting people from the worst brokers. Sarcasm alert. They you know, the voiceover is narrator. They didn't, right, I mean, they did a horrible job. What they did was protect And I don't want to make this a I have a lot of respect for shops like Morgan Stanley and Merrill Lynch that have been around for forever and help democratize investing,

Well, but that that's why, right, That's why they were able to justify a lot of these restrictive rules over the years, Right, because there were people out there doing bad things and.

So that they failed to regulate.

Right, And so when larger firms would push would advocate for these rules, right, no one thought about the law of unintended consequences. The big firms did right, there's really smart people at More Stanley and Merrilnch and Goldman Sachs.

Right.

I mean, these people are really smart and they have time to think about this stuff, right, whereas small firms, as you know, are just reacting to these rules on the most part right there, they don't have as many resources to participate in these meetings and the rulemaking and writing comment letters, and so as a result, large firms have an outsized influence over the rule making process. That's just the way it is.

Really interesting. So let's talk about this space that I think has really gained traction in the past couple of years, the idea of the outsourced chief compliance officer. Tell us a little bit about that.

You know, back in two thousand, we had two services at Market Council. One was the RAA Incubator, which we still have to this day. The other was called your Compliance Officer, and it was kind of a cheeky name. But keep in mind, this was like Windows two thousand era, right, where like everything was like my files and all that

So how many firms can out source chief compliance officer be an employee of and still stay true to that mandate?

I don't know.

You can't do ten thousand, but you could probably do twenty or forty.

I don't know. I mean, the SEC hasn't been clear on it. We don't think it's possible at all. Like we don't really yeah, I mean, you know, our reading of the rule indicates that, you know, someone who is an outsourced service provider cannot serve in the role as chief compliance officer. But I know other firms do it right, They've made a business out of it. But before we hired a chief compliance officer, we were working with a regulatory compliance firm out in LA.

They were very helpful. It wasn't that they were a chief compliance officer. But let's be honest, effectively when you're hiring a third party, and I got to think this is true for Market Council also, when you're saying to somebody, hey, we don't know what the policies and procedures should be. We don't know what we What do we need to do to make sure? Will we pass our next audit?

Of it.

Whether that person is a full time employee or an outside attorney that's giving you advice, how big a difference is there?

To me, the distinction here is that we're helping run an outsource compliance department. Right, we should be all of the resources that a fully functional outsource compliance or compliance department should be on the other end of an email and the other end of a phone call, any type of communication. But to me, it's critical that that chief executive, the chief compliance officer, the c suite individual sits as an employee of the firm so that they have the

And it doesn't necessarily have to be a single, dedicated person. It could be someone wearing multiple hats and when they say, okay, now I'm chief compliance officer, you're working directly with them.

Yeah. A lot of people have noted recently. You know what I think has been a longtime trend, which is that the chief operating officer often also serves as chief compliance officer. I don't think that's the wrong call, right when someone needs to wear more hats, because to me, regulatory compliance is simply an operational baseline standard. Right, that's your non negotiable line, right. It's like, we never dip

Assuming you have a chief operator were especially you know, smaller firm five ten people, they may not have an operating offer.

Then it's you know, who's signed the operating agreement last right.

Right, or whoever's overseeing the advisors they're cfps, and it's not you know, on a broker side, that person is trying to encourage transactions with which generate revenue on the fiduciary side. On the ra side, hey, the revenue takes care of itself. Is a fee agreement. You just want to make sure the advisor's doing with what they're supposed to be doing and staying compliant. It shouldn't shouldn't be

Well, but within that experience, don't you think that it's as much a quality of service issue as anything else?

Right?

We talked earlier about the distinction between compliance, legal and risk. But much of what you know regulatory compliance is something that we can handle, right. We know it's a finite you know, set of rules, right, But what you're getting into is is moderating oversight, right, making sure that people are doing the right thing. And quite often when you when you find a dispute with a client, it comes down to poor communications.

Almost almost always. So. So you mentioned earlier the SEC, and I think I brought up audits pre pandemic. The rule of thumb was, hey, expect an audit every three years, and then the pandemic happened and for three years, you know,

I just don't think it matters really.

Yeah, you know, I remember prepping for i know, first audit and it was like, you know, it was like the bar exam, going to the prom and the SATs all rolled into one.

I think your perception is shaped by when you entered into this industry. Right, People used to market all the time, death taxes, regulatory exams. Right. The thing I can share is that there's a zero mortality rate, you know, attached to regulatory.

But there are fines there are like, hey, you guys suck, You better get your act together. Just as a matter of pride, you never want to have something like that happened.

There's there's no question that the SEC's regulatory exams have gotten better, and they've gotten better primarily because the SEC

Meaning that they they're in opposite each other and you can't actually fulfill all those.

Obligations either that or one is so vague that it could be argued that it's misleading, right. I mean, when advisors talk about their fees, this is a really big area because.

Isn't that on a form adv disclosure? Isn't that all man? We're really inside baseball today, I mean, isn't that all out there? How do you mess that up?

It's so easy to mess that up. Really absolutely, I'd say more advisors mess up their fees and their conflicts of interest than anything else, right, because with their fees, advisors want to be aspirational in their disclosure. They want to say, our fee is one percent right. They don't want to get into all of the qualities they look at when they discount that fee. They don't want to disclose conflicts of interests that come along with the way

So I started out with a disclosure. Let's wrap up the last segment with a disclosure. Which is my rule of thumb is always even if there is a conflict, and we really work hard on the fiduciary side of the street. I don't mean just our WM, but the whole Ria industry tries to not have a conflict. Isn't

Issue mostly mostly? So going back to mostly but I just want to I don't want to just have mostly hanging out there mostly, but it doesn't resolve at all. Right, And some conflicts are are simply improper, right, you simply can't can't disclose them away.

Like like what sort of conflict?

Well, so so use that example right where you disclose that you have this venture fund, right is your own fund. And as by.

The way, one of the things we will not put into the venture funds is an ETF or or anything investing that then we're going to buy for the client because clearly you're on both sides the trade. There, that's a no no.

So there you go, right, there's one of them. How about the other one being if these are if these are funds that you are recommending an allocation, you're not going to recommend your own fund get paid for the investment advice and that get paid out of fund express, right, that's right. So there are some conflicts that are just just too far. Right, the SEC is going to say

And we've heard we've heard people, we've heard horrible stories about AI, especially somebody like you who's in the public or me in the public domain. You could use AI, pull a bunch of language out and create a phone call that sounds like a person you were telling a story about that. How dangerous is cybersecurity and this sort of AI generated impersonation to fraud protection?

Yeah, I mean, let's let's just touch on cybersecurity. Cybersecurity is a people problem, right, It's just that the root of where they're getting the data is technology, and.

The social engineer acting is is is the data.

But it's almost all coming from people. Right. It's it's your unroot to a conference or I'm unrout to a conference and someone is specifically targeting your colleagues, right, I got I got an email from from one of my colleagues years ago. Uh, and he received an email before that that said, Hey, as you know, I'm flying out to this conference is a well known conference in our interspace.

Unbelievable. All right, So I have two curveball questions I got to ask you before we get to our favorite questions in our last five minutes. The first is you were a chef in the US Coast Guard Auxiliary. How the hell did that happen?

You know? I uh, I'm an incredibly curious person. Some would say just you know, I'm just jumping. And anytime I'm interested in something, I want to know. I want to know how people do it, I want to know how things work. And so I joined the Coast Guard Auxiliary when I bought a boat back in two thousand.

So we're not talking about JAG. We're talking about literally the Coast Guard Auxiliary.

Yeah, the Coast Guard Auxiliary. Now it's you know, it's a group of largely retired servicemen and women who get together to help support the US Coast Guard. Right they call it, you know, they call the US Coast Guard the gold Side, And we were the silver Side. And so I joined to get free boating education. I joined to learn navigation, joined joined to learn weather.

And they give a lot as a fellow voter, they give courses. Yeah, you could sign up. You can learn to sail, you can learn to navigate by the stars. You can do all of it with them.

Yeah and so, and I love the camaraderie of the group. And one of the programs they had, they used to call the Chef program the Auxiliary Chef program. Now they call it Auxiliary Food Service. But the program is about augmenting the capabilities of the gold Side so that someone can take a few days leave or that's or that or when they run you know, when they run low,

That sounds fun. And then you almost had a career in radio. Tell us how you sidestep that and went into legal practice.

I think what you meant to say is have a face for radio.

I definitely same. Same. So you you were in your college radio station. Tell us a little bit about that.

So I was convinced to do college radio early on our freshman year and we got a show. It was the worst time. It was during Monday night football, right. Who listens to radio during Monday night football at college? Nobody? But that was freeing, right, because we can kind of do whatever we wanted on the air and make mistakes and no one really noticed. And so over the years we got bumped up to the point that we got our slot Thursday night eight to eleven, which was like prime.

Sure, you're getting ready to go out for a Satursday night in college?

Pree gaming? Right? And so we, uh, we were doing our thing. Unbeknownst to us, there were ratings. I didn't know anything about ratings. I knew you had to get an FCC license, but I didn't know anything about ratings. And unbeknownst to us, we hit the UH, you know as like the top program in that time slot in New Haven and got all all sorts of crazy recognition. But we were just you know, two roommates getting on and UH and doing an old school rap show.

That's a let wait, old school rap show.

Old school rap wait.

So the two of you would drop and beats and lyrics on the radio. That sounds really embarrassed.

I wasn't rapping, okay, but and I call it old school. It's only old school sitting here today, right, it wasn't old school back then.

We've talked about this before. To me, old school is is Pol's boutique and Beastie Boys. That's about as far as my hip hop progressed.

That's pretty good, Yeah, not too bad.

So in the last few minutes I have you, let's jump to our favorite questions that we ask all our guests, starting with what have you been watching? What have you been streaming? And what's kept you entertained in the pandemic and post pandemic era.

So I will tell you that I am. I am not a good streamer.

Okay, it's not hard.

I know it's not hard. But I'm one of these people that almost prefers there to be crap on TV right, so that I can do other stuff and have that on in the back. Okay, So I love I love putting on sports in the background that I'm marginally interested in. Right, Throw on a Yankee game. I could hear the announcer of the inflection and the voice. Throw on a soccer game. I love watching soccer, or actually I love having soccer on right.

And there is a certain energy to World Cup, the back and forth. It's like waves and you can kind of half pay attention to it.

It's awesome and and you know, undeniably anytime you get into March madness, it's one of the best times of year. So I don't really obsess over over much on TV. I will put on any anything on that Geo or History channel and kind of geek out over that stuff. But my deal is I use like one of these services where anything I find interesting, I just tag it as like a to watch watch it later, Yeah, like something like that, right, and then and then I have

Let's let's talk about mentors who helped shape your career.

You know, I think I think everyone that I came across did in some way, shape or form.

You know.

I used to I used to hate this question about like who's your idol, because I never I never thought that that was a fair assessment of anyone. But but in terms of mentors, you know, I had so many and continue to have so many that that came before me that I learned from. Some I strangely learned what I didn't want to be and the road I didn't want to take right. It was a lot of a lot of other people's mistakes that I would that I

And that's interesting that that's a full arc from from employer to team leaving to retirement. That that's not usual. You don't usually get to see something like that.

It's not usual. But I'm really really grateful for those types of experiences.

Let's talk about books. What are some of your favorites? What are you reading currently?

So you and I went to a conference and we.

S Darren's Individual Advisor Conference in Independent, Independent, and we got to live through a tornado that turned the sky black and people standing in front of these giant plates of glass and hey, I'm not from Texas, but maybe those big windows are not where you want to be. Is this funnel comes ripping towards the hotel?

Probably not, but that's where that's where I pulled my latest book from the speaker they had that night was Jeremy Siegel.

The professor always great.

It is always great, and so I jumped into his book stocks for the long run.

Now in like the eighth edition or something six right now, sixth edition. But yeah, that sold a couple of million copies. It's one of the best sellers in the space.

I found it. So here's my disclosure about books. Right. There are certain books I read when I was young that had such an impression on me, and nowadays, anytime someone tells me about an interesting book, I buy it first and I start reading it. So I've begun reading. I looked knowing that you're gonna ask me this question. I have one hundred and forty four books that I've started reading and I'm in progress as some.

Are you going to read them?

Because I will.

By the way, some people seem to feel that books are like homework and once you start, you have to finish. There's nothing wrong with picking up a book and saying, oh, I'm not enjoying this and moving to a book that you'll actually like.

I totally agree with you. I mean, there's too many books that I read the first chapter like nine times because I keep picking up and I'm like, all right, if I'm not into this, it's okay, Like just you know, toss it to the side. I also started reading book The Hard Thing About Hard Things. You know, it's a fascinating book.

Who authored that? By Ben Horowitz of Andresen Harrowez. He's also a prior guest. He's a fascinating guy.

Yeah, and I love his take on we're not talking about the herd issues, right, Like, I think through things that people call luck or things that people call happenstance, and I think I love to think through all of the permutations that led to that point in time, right, all the decision points and even lack thereof. And you know, he kind of starts to get to to some of that things.

Just because somebody's lucky doesn't mean they weren't good or putting themselves in a position where a little luck and shoe on that.

But where's that right balance?

Right?

Do you want to be you know, you don't want to be so pompous to say that there is no luck, right, right, But you also don't want to, you know, be you know, so soft as to say like, oh, it's all luck, right, It's it's not it's you know, it's some it's some logica. It's some logical confluence there, right, and setting yourself for luck. You know. I'm getting to to that point that you know, people recommend books about about how much time we have left.

I love that title, by the way, it's awesome genius. Yeah, yeah, I started that, but I need better time management skills in order to finish it. But it's it's you know, it's one of those things you could just pick up a chapter at a time, so.

You can, and and it's a I'd say it's a light read. It's probably not a light read, but it is more of a time management book, right than a book about our own mortality.

Explain what four thousand weeks are?

Yeah, it's it's how much time you have in your lifetime if.

You're if you're lucky, you know, you and I have a thousand weeks left, yeah, and.

So and so it it it puts some degree of impetus to get to the things that you're just saying, we'll do it later.

Your bucket list, which most people don't don't tag.

So so, like I I always love having a variety of books that that I'm reading that kind of checked the box. Whether it's it's hard finance books, or it's strategy books, or it's uh, it's it's empathy and uh, you know, emotional books. But the stuff that I read when I was younger kind of in my you know, I guess, early late teens, early twenties.

Give us an example.

I read The Millionaire next Door right when I was young, Yeah, right, and like I just it just stuck with me.

Really. Yeah, there's just there's certain books that just sit with me aspects of that that are very valid. I shouldn't just have like an automatic Yeah. And I can't respond well.

And I can't tell you anything about the book itself, but what I can tell you it left me with is that you always have control over what you spend, right, and less over what you what you make.

Now, by the way, I'm gonna withdraw my I'm gonna I'm gonna say that respond to that again because I'm thinking of a different book, and it's not this one. So raspberry with Raspberry withdrawing, I'm thinking of, well, I didn't say that, but yeah, that's what I was. What makes Millionaire next Door so fascinating is that we tend to think, well, you you read it more recently than I probably did. No read so what I remember that is, Hey,

There's there's no doubt that if I could sum the book up in one word, it was moderation, right, is it enjoy just and don't enjoy the success? Right? And it was such an offset to popular culture at that time, which was celebrating excess. Right. It was athletes and entertainers just like that was the look of millionaires until I read that book also a little later on read where are all the customers Yachts?

Not been a good speed? What's his name? I read that book a long time ago, and it's hilarious.

It's hilarious, right, I mean, it's about this guy walking through Wall Street basically saying, hey, wait, I see I see all the yachts from the people who work here, But where where are all the customers yachts? And and I thought that was just a really good take.

Fred Schwead, Yeah, I had a search for that because I couldn't access his.

Name, and it's just, you know, it just it's very poignant. And to this day I think about that when we think about the inequity that exists between financial institutions and retail customers, right, and the good work that since that book was written, that advisors have really done to democratize investing.

And that book was written seventy five years maybe even longer.

I want to say it was in the forties if I recall like postwar period, yeah, forties, fifties, I'm thinking fifties, nineteen forty very good.

I thought it was a little I thought it was a little later. So any other books before we get to our last two questions?

You know there's other books that that stuck with me. Freakonomics is one. You know, how to make economics interesting to the masses. I just love the approach that those guys took. And I'm just a I'm just a heard when it comes to economics to technology and all that sort of thing and building a business. In two thousand, it was tough to avoid books like the e Myth write this concept that business process drives consistent results? Which did?

All right, And our final two questions, what sort of advice would you give to a recent college grad interested in a career similar to yours? Regulatory compliance, legal finance? How would you advise them?

So, my oldest daughter just graduated from pitt last year. My middle that was Ella, my middle one, Jake, is graduating from Georgetown next month. And my youngest, Sidney, is a freshman at University of Miami. Both Jacob and Sidney are in our finance majors. And so I've had some I've had these are been real talks. These aren't just theoretical. What I would tell them that the finance industry can be a lot of things to a lot of people. That there's not a single career within the finance industry.

Was job five years ago, ten years ago?

Exactly? So do you only want a job that exists in the finance sector or do you want to find a job that's transportable elsewhere? And so so, speaking to Jake about that, right, he had experience working working for US, he had experienced working within on the investment banking side, working for David Devaux, he had experienced working within with

None of the kids want to go work for the old man in his business take it over.

It's it's never it's we've never discussed it as an option.

They've all worked with me. But I think and that was plenty.

Well, no, it wasn't plenty. Actually, I still I still love my daughter and I still work together all the time. She's a salesforce consultant and she is one of the easiest people in the world that I can talk to because she knows where I'm going with things before is a shorthand that it's amazing and so I would never preclude that. But you know, part of what we do stems from a degree of confidence in your skills and capabilities.

No, that makes a whole lot of sense. And our final question, what do you know about the world of finance, investing, regulation compliance? Today? You wish you knew twenty five or so years ago when you were first getting started.

That's so easy. I wish I knew not to listen to financial media when they would say markets are up today because or markets are down on fears of blank. I used to think, Barry, that I was missing something. I used to think that I was just you know, like, how do they know that all of the millions, billions of inputs and outputs in the market all came down to that. And the fact is they don't, Right, They're oversimplifying a very complex problem. And I wish I knew that back then.

I also wish that's fascinating.

Yeah, I also wish I knew that that I know more than I thought I knew. I wish I had a little more confidence. And you know now I'm confident, not because I know a lot. I'm confident in my ability to recover from failures quickly and to change course. And I think most business owners we find ourselves like fish in a tank. Right, you hit the glass, you just change direction, Whereas when you're earlier, you don't want to touch the glass. You know, you don't want to.

One of my old time favorite publications, laslo Berni, puts out an annual media round up and it's presented without commentary, and it's just the most important media stories from the Wall Street Journal, the New York Times, the Washington Post, the La Times, and it's just xerox and bound, and it's by the time you get it, everything's a year old and exactly what you're describing as you go through it, the things that are the big scary headlines, they just

So when the day after Silicon Valley Bank blew up, right, I got a call from a reporter and they use the words in these unprecedented times, right, And I had to stop for a moment and I said, how old are you? Because these are precedented times? Like we know exactly you know what we're dealing with, and hopefully we don't go back to, you know, to to that again. But I think it just gives you a sense of place, right, And at the end of the day, isn't that what

I like that that that you could do a lot worse than that. We have been speaking with Brian Hamburger. He is the founder of the Hamburger Law Firm, as well as the leading regulatory compliance and consulting firm, Market Council. If you enjoy this conversation, well, feel free to check out any of our previous nearly five hundred discussions we've had. You can find those at YouTube, iTunes, Spotify, or wherever