Will McKenna: Hello, and welcome to the PracticeLab podcast, where we talk to top advisors about what makes them successful, so that you can apply those lessons in your own business. I'm your host, Will McKenna, and our guests today are Rhonda and Scott Ferguson, the mother-and-son team that runs Financial Concepts in Columbus, Mississippi.
The practice has about $750 million in assets under management and they expect that number to grow to more than $1 billion in a few years. Rhonda and Scott have an interesting story to tell on how they cultivated a strong niche in helping everyday workers at large local mills and factories with retirement planning. In this episode, they’ll share how they mastered the employee benefits packages at those firms better than anyone in town, even the firms themselves. And how that became the first step in a journey that turned them into a de facto arm of the HR departments of those companies.
With that, let’s jump into this episode of the PracticeLab podcast.
Will McKenna: Rhonda and Scott Ferguson. Welcome to the PracticeLab podcast.
Scott Ferguson: Thank you for having us.
Rhonda Ferguson: Yeah. Great to be here.
Will McKenna: All right, excellent. Well, let's go ahead and jump in. And Scott, I'm going to start with you. If you would just give us an outline of your business. Can you paint a picture of your practice as it stands today?
Scott Ferguson: Yeah, we’re located here in Columbus, Mississippi. It's been home since inception, it's going to be home going forward. This is where our roots are. We've got a small house in downtown Columbus. If you look at it from the outside, I imagine it looks like a pretty small practice, just a small little green house. But in reality, it's a pretty big practice. We've got about $775 million in assets, we’re in the top 10, as far as being one of the largest investment advisors in the state of Mississippi. But we work with Middle America, and the folks who are working hard day in and day out: your factory workers, your mill workers, your folks who are just going to work day-in and day-out to save and accumulate for those big-picture goals like retirement. And this is our target market. Because this is who we can relate to, right? We're small-town, Middle America too. That's where we've grown up. That's how we were raised. And we can relate back to these folks.
Will McKenna: It's an excellent way to kick us off. And, Rhonda, let me come over to you maybe expand on that and talk about what do you think makes your practice unique, you know. Give us two or three things that you consider distinctive about your approach.
Rhonda Ferguson: It really is all about families. We work with families, we work with lots of generations of families, we have a lot of households, because we have everything from the $1,000 account that grandparents set up for grandchildren (and now that grandchild is an adult), all the way to large accounts. But all of our clients are connected. They are either related to each other, they work together, they go to church together, they’re friends, they’re neighbors. We can't go anywhere without running into a client. We can't go to the grocery store or a soccer game without running into a couple of clients. I ran into some last night when I went to see my middle grandson play in soccer. So it's really a nice family atmosphere.
Will McKenna: That's great. So you've got a real community there. And you guys were telling me before, in the county where you're based, there are X number of households, and you probably serve the vast majority. Give me those numbers again. I don't know if, Scott, you had those on the tip of your tongue?
Scott Ferguson: So in our community, there's about 36,000 people that live in Columbus. If you stretched out a little bit further, you know, more regional, you're talking about maybe 100,000 people. We've got 2,200 households that we work with. So, if you've got a four-person household, you start doing the math on that, that's pretty significant portion of folks that we work with here in that local community. As far as what income that we send out from our accounts, on a monthly basis, on a yearly basis, we are, fourth- or fifth-largest income provider in our regional area. So, you’ve got to compete with, like, we have an Air Force Base, which is hundreds of millions of dollars of income, a hospital, a couple large factories. And then here's Scott and Rhonda, providing income to our retirees. If you look at that from a payroll standpoint, I think it's pretty mind-boggling to me to think that we're the fifth- or sixth-largest payroll provider, so to speak, in the area.
Will McKenna: That's an incredible way to think about it. And I've never heard it framed that way before. Basically, there's some very large companies or organizations in your area whose payroll, only a few of those are bigger than the, quote, kind of retirement payroll that you're paying out to your clients that they're drawing on income on a monthly basis. Incredible story there. And Scott, let me stick with you because when we were preparing for this, you were telling me the business has been growing rapidly. You mentioned 2,200 households. That's a lot. $775 million under management. Where's that growth coming from? What's driving it? What does your client acquisition or business development marketing process look like these days?
Scott Ferguson: There's definitely some marketing in there. I definitely think I'm of the mindset that I want to be out in front of folks, because financial decisions don't come up each and every day. The big ones are a part of life, but does someone think about their retirement each and every day, probably not. But when they do think about it, I want my name, my face to be the one that they think of. So we do some marketing locally: social media, print advertising. Billboards are something that we picked up four or five years ago. It’s very inexpensive, and it works. It's just a way for your name to be out there constantly when someone's driving down the road. But the biggest driver of our business and new clients is word-of-mouth from other folks. As Rhonda said, if you take care of somebody, and you do a good job for them, they're going to put your name in somebody else's ear. So whether it's a $1,000 account, or a multimillion-dollar account, we treat everybody the same. We take care of everybody.
Will McKenna: That's great. It sounds like you've got such a big community there. And as Rhonda said, you bump into people at the grocery store, or church, or soccer games, or wherever it is. I can see that really being part of your process. You know, Rhonda, I know one of the important streams for your business has been relationships you've built with some of the select companies in your area. I understand you conduct some employee education seminars with some of those plans? How did you get started in that? Give us the story of that part of your business, and then how it grew from there into what it is today.
Rhonda Ferguson: We were fortunate we had some clients who worked at the best employer in our county, I guess, in the mid ‘80s. And that company was doing a tremendous job of educating their workforce. They had an education specialist, and she would come in and do a two-day workshop about financial planning and retirement planning. But she was amazing. She talked about, “What are you going to do with your time when you don't go to work every day?” Health and wellness, she talked about estate planning. The company did rotating shift work, so they tried to do it where every other time the other shift could come to this two-day workshop. So Scott and I just kind of piggybacked off what the corporate educator did and do another one for the other shift. And so we just we just knew our job had to be to know their benefits inside and out. And so, for a long time before they outsourced HR, the HR people would call and say, ”I've got somebody who needs to go out on disability, what do they do?” And it kind of carried forward with some other companies. We just know what their benefits are better than their co-workers or their HR folks do.
Will McKenna: That's great. And so that's, I think you started with a paper mill, if I'm not mistaken, and then you've grown it from there. How did you leverage that expertise or that experience you had into other companies in the area? Take us through some of that process.
Rhonda Ferguson: These days, it's easier than it used to be. I mean, you can do a Google search and find an employee handbook, and then dig into the specific plans and look at the health insurance provider, look at the disability roles. We just made it our business. And we have an amazing economic development executive in our county. He has brought billions of dollars of jobs to our community. There was a big announcement last week, and Scott and I were like, “We’ve got to learn those benefits. We've got to learn, because it's going to bring about 100 jobs to our community.” We just make it our business to know what those plans are.
Will McKenna: Yeah, go ahead, Scott, continue on.
Scott Ferguson: Well, I was going to say, you asked how we built it. And that’s another piece, kind of piggybacking on to that, is just knowing these employers. There's not that many large employers in our area. And I think this can be taken and put into place in other places. Just pick the five or six that you want to be the expert in, right, there's six or seven companies here, and we just know the benefits backwards and forwards. Do I sell health insurance? Do I do disability insurance? I don’t, but I know those rules and how all that stuff works. So I can help someone navigate that path, point them in the direction of someone who can help them with that. But just being an expert in all those different things, when they have those big financial decisions, as big things to think about those IRA rollover opportunities. If you've helped them through all the minutiae of all the other stuff, they will think about you when those big opportunities come up.
Will McKenna: That's great. Stick with that for a minute, because I think our audience of other advisors listening to this are probably curious about understanding the specific mechanics. Do you literally reach out to the folks in the HR department? Do you build relationships there? Do you get an introduction somehow from existing clients? Do you then hold seminars or education meetings at the company, the plant, the factory? Or do you hold them outside somewhere else? Give me the nuts-and-bolts mechanics of how you guys get this going.
Scott Ferguson: You kind of covered it. It’s a little bit of all of that. Sometimes it’s reaching out to the HR department, sometimes it’s a client connecting you to the HR department. When I have someone — a prospect or a client that's coming in from a company that I'm not the expert in those benefits — I'm going to ask that client to give me everything they can, right? And nowadays, as Rhonda said, with Google and with their employee portals, they can pull all this information and get it to you. Does any employee go in there and read the summary plan document of their 401(k)? No. Who does that, right? I do. Rhonda does. That's what we do. We look at those fine details — same for the benefits packages, disability, short term, long term, all that stuff. It's all there and available. You just have to get a way to get in and get it. So we ask for that. We've been fortunate to go on site with several companies and do employee education events. Sometimes we've done those outside, like a company a couple years ago that sold. It was sold in two different pieces, and one part was closed. We did education events two different ways: one for the folks who were going this way to the new company, then another event for the folks who weren't so fortunate, and they were having to figure out what they were going to do. Right. So breaking it down all those different ways, that's just a little bit everything. And once you get that handbook in your hands, sky’s the limit, all you’ve got to do it learn it.
Will McKenna: And as you said, it makes me laugh: You’re the ones reading the employee handbook, not the actual employees. Go ahead, Rhonda, you were going to add something there.
Rhonda Ferguson: I was going to say, too, in the beginning, we were working with the actual shift workers, before we ever worked with middle management, upper management of these companies. We were working with those people who were working 60 hours a week. One week they worked in the daytime, the next week, they worked at nighttime. Back in the ‘80s, when I graduated from college and started financial planning, and “Millionaire Next Door” was the was the best-selling book forever. And those are our clients. I mean, we lost someone a couple of weeks ago, or a week or so ago. And this man told me the day he retired, he said, “I graduated from high school one day, I got married the next day, went on an overnight honeymoon and started working at the paper mill on Monday.” You know, those are our clients. And he eventually worked up into high-level management at the mill we work with. But those are our people, and they have simple wants and simple needs. And it's a very simple but very rewarding financial planning relationship.
Will McKenna: Rhonda, one thing I'd like to clarify: It's fair to say you don't have any of those plans, correct? You're not the advisors of record at the plan. So tell us about that, because it's based in some other headquarters somewhere. Or give us a sense of that and how you've still been able to get into those companies, even though you don't have the plan?
Rhonda Ferguson: Well, we're working with people whose companies are headquartered far away. They want to meet with somebody face to face. But we're not the plan. We're not part of that plan. So we're helping them navigate if they should have to take money out to put a child through college, or they have medical issues and they need access to dollars and they're too young. We're navigating those rules. But no, we're not part of these big plans.
Will McKenna: I got you. That makes sense. Well, Scott, give me a sense. You don't have to name the names, but you mentioned a mill? What are the types of large companies that we're talking about in your area?
Scott Ferguson: Yeah, some of them are Fortune 200 or Fortune 100. We’re talking about very large paper mills, very large engine manufacturers for semi-trucks. The biggest player in that realm has a factory here. We've got a steel mill, making steel coils that seems to be all the rage these days of steel mills popping up everywhere, especially in the South, because it's much more economical to build a new, modern, technologically advanced plant than it is to retrofit the old plants. So we've got some of that; we got some chemical plants in the area. But kind of piggybacking on what Rhonda said there a second ago is we don't have these plans. We're not the advisor of record on these plans. And if it's someone and the only asset they have is their 401(k), and they're still working at this paper mill, we're going to help them figure out what is the best funds for them to use based on their goals and objectives. But we're not charging to help them do that. This is us doing this as a goodwill, showing them how to take advantage of the plan they've got in hopes that, down the road that we've helped them all along, they're going to let us help them when they switch that other phase of life or when they go to a different company, right? So I think all too often advisors we fall in the trap of figuring out how we're going to go to monetize what we're doing. And a lot of what we do is we don't monetize it, and we do it for goodwill. Again, going back to doing good for others will do good for us in time. It's that long-game approach, looking at it like that.
Will McKenna: OK, so far, we’ve covered Rhonda and Scott’s focus on the local workers and their retirement planning. Now we’re going to hear about their investment approach and the excellent service they try to provide to clients. So let’s turn it back to Rhonda as she talks about her lightbulb moment when she realized that her charts and graphs weren’t conveying to clients the fact that she really understood their needs.
Rhonda Ferguson: Well, when I graduated with this, all of this great knowledge with my managerial finance degree, I thought I knew everything I needed to know. And I'd meet with people and show them charts and graphs, and their eyes would glaze over. And they'd walk out, and I'd never seen them again. And I didn't quite know why. And it was realizing that what really mattered: They expected me to know what I was supposed to know. What they needed to know was that I knew them. And so somewhere along the line, it got simplified. In my mind, I just needed to answer their problem or their issue — not describe how we were going to do it, but just say that we could do it. And in the beginning, we had a lot of different investments, and we used different investment companies. But I was out in Los Angeles for a dealer briefing. I don't know if that's what they're called anymore. I don't know if you still do those, but it was a wonderful experience. And it might have been the second time I had been out there. And on the plane home I thought, ”My life would be so much easier if I simplified all of these processes, including the investment side. I wish I only used Capital Group and the American Funds.” And somewhere halfway across the country, it dawned on me that I could. And so we just started shifting to using the wonderful choices at American Funds. We created our own models. There was Triad as an old strategy at American Funds, and we did that in the beginning. Then over time, we just kind of realized that our belief is that it takes equities to have growing income. We use bonds to stabilize portfolios; we use some preservation portfolio tools. But we just decided, mainly, we build a conservative model and a moderate model — every now and then, we adapt it for someone who's aggressive. But a lot of times, if we have someone who's really aggressive, we can use those target date or lifestyle funds that are for a longer period of time. We just keep it really, really simple. We have excellent service at Capital Group. We have our folks, they know us, they know how we do business, and they take care of us. It's just so much easier than learning all of these things at all of these different places. And then the last thing we did that simplified everything, Will, was when we decided that we had better technology than our broker-dealer did. We knew how to take care of and protect the client, more than we were protecting the broker-dealer. And we went independent RIA. And Capital Group helped us do that, too.
Will McKenna: OK, that's great. And Scott, I want to pick up on that, because I know you both have talked about how service, the service you provide, is something that you really focus on that you're proud of. And you were telling me some stories about the kind of, as Rhonda put it, “The Millionaire Next Door” and how they would call you and ask you whether they can spend a certain amount of money. But give us a sense of the service that you provide, from your point of view, Scott?
Scott Ferguson: Service to us is what differentiates us, right? Anybody can put together an investment portfolio and give that to somebody. And odds are, as long as you picked some decent funds, you're probably going to come in fairly close to each other, right? But what differentiates yourself over time is how you build those relationships, how you take care of folks. And so we want to be full service for each and every client, whether you're the top of the list, or down here with a very small account. If it's an address change, call me. We'll take care of it. Income changes, call me, we'll take care of it. Whatever it is, call our office, let us know. We're going to take care of it. You don't have to go online and fill out a form to update your bank. We're going to email you what you need right away. You're going to go in there and DocuSign. It's going to be done, right? You don't have to call a 1-800 number to change your income. Call us, let us know. Being an independent RIA, we can text. So we've got text services that we can use. So if you would prefer to text me, text me. Whatever it is, whatever the easy way that you want to communicate with me, communicate. Let me know what we can do to help. And so talking about funny things, I mean, we've got folks that have got very large accounts, want to know if they can afford to take out $2,000 or $3,000 to go to the beach for a week? Absolutely. Of course you can, right? But they've got that “Millionaire Next Door” type mentality where they've never done that; they've never spent very much at all. And so taking that money out, especially in the retirement phase, is a big deal for them, right? So where sometimes it can be easy to kind of laugh that off as a kind of joke right there. Of course you can do it. Why not, right? But taking the time to talk to them and explain to them how it's not going to hurt them in the end, and letting them know that they've worked so hard to build and accumulate these assets. It's theirs to enjoy, right? So taking advantage of those moments that, quite frankly, seem kind of silly, right? You know, when you've got $3 million, can you afford to go to the beach for $3,000? Absolutely. By taking the time to talk through that with somebody, that's the difference maker. And so whatever conversations somebody wants to have, if it's a very simple conversation like that, very deep, whatever it is, we take the time to listen, and then dig into it and give them the answers and advice that we think is best.
Will McKenna: That's excellent. Let me stick with you because I want to shift to talk about what are your plans for the future of the business? Obviously, you’re a mother-son advisor operation. You've got maybe built-in succession planning here, Rhonda, with Scott at the company. But Scott, let me start with you: How are you thinking about the future in terms of big opportunities and challenges you all want to go after over the next two, three, four or five years?
Scott Ferguson: I think opportunity-wise, and I've seen this for several years, and we just haven't taken advantage of it. I think the small-business retirement planning opportunity, I think that's huge. That's something that we do want to continue to look at a little bit more. There is succession plans in place, obviously, where I have stepped in and started taking over ownership of parts of the practice. But moving forward, that would continue. But then looking ahead, I think a big challenge is finding other advisors that we can bring in, like a junior advisor or junior planner to help continue this process, right? Because the way that we do things I think is very different than what other folks do. And I think it's very different than the way things may be taught in school. Because in our industry, we like to make things as complicated as possible, muddy the waters as much as we can. I made a joke the other day to another advisor that sometimes I get these investment prospectuses that will be dropped off. And it's like, who names this stuff, right? It'll have the most complicated, convoluted, longest name in the world. It'll be like series two, or series three at the end of it to make it sound even better, right? What is that, right? So we try and make things as muddy as possible. And Rhonda and I are over here trying to do just the opposite. We're trying to make it as simple as possible, right? We don't have to have all these super convoluted, very hard-to-understand terms and terminologies. We can make things very simple for folks. We've shown that we've been able to do for a long, long time now. So I'm excited about the future. My biggest goal that I've got out there is a personal goal: I'd like to have a billion in assets under management. I think that would be a huge accomplishment, especially from small town Columbus, Mississippi, to be able to log in and look and see that assets under management. That would be huge. And that's what we're aiming and shooting for. You know, a ways to go, I think we did the math earlier this year, based on current trajectory, even with very moderate market growth, and five, six years, we can do that.
Will McKenna: Okay, that's great. And it sounds like some interesting areas for you to target, whether that's small-business retirement plans, bringing in someone else. But as you said, you think you do things so differently. And it does by the sound of it. In some ways, a lot of the industry, as you point out, is going more complex. You're going more simple. But also, by and large, the industry is going more and more upmarket, bigger accounts, high net worth. And you guys are happy to work with the folks in your community who may not be there today. But as you've pointed out, may get there over time.
Scott Ferguson: Don't get me wrong, I love high net worth accounts, if a $2 million account walks in the door, don't get me wrong. But I also know and see the value and taking care of $100,000 or $200,00 accounts too, right? Because that can grow, and that can lead to more. And so we're what we've always been focused on those smaller fish. And I think that's going to continue to be the case, because a smaller fish multiplied into a very, very well stocked pond, so to speak, with some really big fish in there, too.
Will McKenna: That's a great way to put it. Rhonda, let's pick up on that. What advice would you give? You’ve been in the business, as you point out, since sometime in the ‘80s. What would you say to fellow advisors for some of the things they can do to be successful as they're trying to improve their business, improve their career?
Rhonda Ferguson: I'd say, keep it simple. Be willing to hire people to do the things that you're not good at, because somebody else is, and to listen. To know that what people tell you they're doing with their grandchildren or what they're doing next summer, that is what it’s all about. It really does come down to family and loving family and doing what you want to when you have enough money to do it, and you don't have to go to work every day. Just listen, those things they tell you about their life are way more important than the numbers they tell you. That's the key.
Will McKenna: That's great. That goes back to the story you told us earlier about earlier in your career. You were very absorbed in the numbers and charts and graphs and realized what really mattered: Your clients expected you to know what you needed to know, but really wanted you to know them. Great, great way to put it. Well, Scott, let me round this out and ask you maybe to close us out: What are the two or three key messages that you'd want to leave with the audience today?
Scott Ferguson: I kind of piggyback on Rhonda’s comments. I think that the biggest thing is listen, and take the time to listen to what someone's saying, and then dig a little bit deeper, right? Why are they saying what they're saying, right? Where is it coming from? Is it emotional? Is it an event they've been through? Kind of figure that out. And then you’ve got a much better place to build that relationship and build those conversations. So listen. Then the other thing is: Be yourself. I learned that a long time ago. I tried to, when I first got started, tried to be the advisor that wore the big fancy suits, all that kind of stuff. That's not me. Not that there's anything wrong with that, because a lot of folks, they can pull that off. I can't, right? I know this is a podcast, so you can't see me, but I'm in jeans right now. That's me, that's who I am. I'm authentic. I'm myself. But it works. Because it works with our demographic, right? I can relate back to Middle America, right? Because my clients aren’t coming in here in fancy suits. They're coming in here in from the mill or the factory, and they're dirty, they're greasy, they got on jeans, too. And we can commiserate about how, you know, boots don't last like they used to, right? So be authentic, yourself, is something that I've learned. And I think that's really helped me be able to grow and build my own personal brand, right? It's just being me. People know, if you see me, I'm going to be in blue jeans. That's just the facts. So be yourself and listen, dig deep. And listen.
Will McKenna: I love it. Be yourself, listen, and come to work in blue jeans. Pretty good advice for today’s advisors. Well, let me end it there. And thank you both so much. Been a real pleasure, Rhonda and Scott Ferguson. Thanks for joining us on the PracticeLab podcast.
Rhonda Ferguson: Thanks for having us.
Scott Ferguson: Absolutely. Thank you, guys. And thanks to Capital Group for all you guys do for us. We greatly appreciate that.
Will McKenna: That wraps up this episode of the PracticeLab podcast. Special thanks to Rhonda and Scott Ferguson for coming on the show. And thanks to my colleague, Alex DaPron for connecting me with them. If you liked what you heard today, please hit the subscribe button and consider leaving a rating and review. PracticeLab is sponsored by Capital Group. You can find all our episodes and more by visiting practicelab.com. I hope you found this episode as interesting as I did, and I look forward to joining you on the next episode of the PracticeLab podcast.
