The Secret to This RIA’s Success: Creative Destruction | American Funds

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Greg Makowski Founding Partner/Managing Member, CFS Investment Advisory Services
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Secret to Success: Creative Destruction

Registered investment advisor Greg Makowski discusses how his firm is using new technology and the process of creative destruction to evolve the business, increase profitability and remain relevant to clients of every stripe.

Video

 

Transcript


Greg’s firm strives to improve processes and boost profitability for itself and its clients

Greg Makowski: I specialize in creative destruction, which is, “How do we, in our business, destroy what we’re doing to creatively re-improve processes?” So I really focus on process improvement, which is driving profitability for us, driving profitability for our clients — because [if] you can drive down costs, you can increase profitability. So we do that a lot.


New technology is key to improving processes

I also am in charge of increasing hospitality to clients. We call it hospitality. There’s a great book that Danny Meyer, who is one of the greatest restaurateurs in New York City, wrote called, Setting the Table. He basically says, “Every business is in the hospitality business; you just don’t know it.” So we’re in the hospitality business. When clients come to our office, it is like coming to their Aunt Mamie’s office or Aunt Mimi’s office. It really is a hospitality experience. They express their joy of coming to our office because it’s biscottis, and it’s everything. It’s crystal. It’s a beautiful setting of the table that they really enjoy. So they like coming. Obviously, husbands and wives both come — and children; we try to get the children in.

How do we drive process improvement? On the investment management side, we use a great custodial platform. It drives costs down, improves processes. We’re using F-2 direct now. It’s obviously easy for IRAs, Roth IRAs, because there’s no tax effect of moving assets. It’s harder on personal money if you’ve got $30,000 or $40,000 of capital gains and how to change that, right? It’s unbelievable, the technology. As a custodian, trading is instantaneous. You’re not block allocating. It’s really unbelievable.

On the wealth management side, we’re really throwing all of our custodians, all of our technology up against the wall and making people re-bid on it. So we’re looking at all custodians, we’re looking at lots of technology, and we will creatively destroy our business to bring in better technology.

 

The firm benefits from taking a multigenerational approach

So we’ll take a step back to be able to really leapfrog forward. We’ve seen amazing things that are available. And so there are custodians doing interesting things out there.

We’re having our young advisors meeting the children. They’re in every client meeting that we’re at, because two years ago some of our older clients said, “What happens with them if something happens with us?” So they’re very engaged with all of our older clients.

They’re very engaged. They do all the technical analysis. They run the software systems. They’re very involved with the clients. The clients call them now on a lot of things.

On the retirement-plan side, again, barrier to entry is huge. We’ve trademarked a bunch of stuff. We’re publishing a book on that called Common Financial Sense. So CFS, we rebranded as to say Common Financial Sense. So Common Financial Sense for 401(k) and 403(b) participants. We’re having our young people get engaged with all of those kinds of participants also. So it’s an interesting dynamic of how people in their 40s and 50s are dealing with our 25-year-olds. And then they’re helping those people really achieve some success.

So we have a lot of initiatives going on. It’s a blast.


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