Close Close
ThinkAdvisor
Jeff Dekko headshot

Practice Management > Building Your Business > Leadership

Why Financial Planning Beats Asset Management for Client Retention: Jeff Dekko

By Jane Wollman Rusoff

X
Your article was successfully shared with the contacts you provided.

Which of two categories of advisor — financial planner and asset manager — has higher client retention rates and greater referral rates?

In an interview with ThinkAdvisor, Jeff Dekko, CEO of Wealth Enhancement Group and winner of a 2023 ThinkAdvisor LUMINARIES award for Executive Leadership, argues that it’s financial planners who are giving consumers what they value.

“Planners craft a plan related to [the client’s] life. An asset manager doesn’t even think about crafting a plan. … They’re just thinking: ‘What should we buy today or sell tomorrow?,’” contends Dekko, who joined Wealth Enhancement as CEO in 2003.

Under his leadership, the firm has become a top acquirer of advisory practices. There have been 68 acquisitions, with assets under management ranging from $250 million to $5 billion.

Wealth Enhancement, growing 30% to 40% annually, is on track to have closed about 15 acquisitions in 2024, Dekko says. The company now manages about $70 billion in client assets, up from $600 million when Dekko took the helm.

In the interview, he specifies one of his main leadership challenges as creating “a cohesive, aligned” company built on the sort of “powerful, strong-minded” people with “strong opinions” that the firm prizes. 

“We’re not doing financial engineering exercises. The object is to create positive momentum that’s aligned for our 1,300 employees,” he stresses.

Wealth Enhancement is among the RIAs starting to leverage scale to deliver greater value to both advisors and clients. But the RIA space remains “quite fragmented,” Dekko notes. “No one player has a dominant position.”

Dekko started as a brand manager at General Mills, where, at age 21, he held a “mini-general manager role with P&L responsibilities,” he says. Later, he was vice president of marketing at Recovery Engineering. Before joining Wealth Enhancement, he consulted to the firm.

In the interview with Dekko, who was speaking by phone from Wealth Enhancement’s corporate headquarters in Plymouth, Minnesota, the CEO notes that he regularly highlights the RIA’s three-part purpose-mission statement in company meetings, as well as when acquiring a practice “long before we even sign a purchase agreement.”

Here are excerpts from our recent interview:

THINKADVISOR: Are there any recent trends that Wealth Enhancement Group has aggressively capitalized on?

JEFF DEKKO: There’s certainly a consolidation in the industry. We came into that a little late, but we’ve become one of the more aggressive acquirers out there.

We’re growing very rapidly. We’ve had 68 acquisitions since I joined the firm as CEO. We’ll [have closed] 15 acquisitions, plus or minus, this year.

When I joined, we started off with $600 million in assets; today we manage roughly $70 billion. It’s been a stair-step of many things that have come together.

What are your thoughts about scale in the RIA space?

Our hypothesis is that scale now matters. There are tools and capabilities that are accessible by organizations like us to leverage scale to deliver more value to the advisor and client.

You can get value from scale. Otherwise, scale is meaningless.

But the RIA space is still quite fragmented. We’re starting to see a few scale providers. Nobody really has that much scale. No one player has a dominant position in the RIA space.

What are some of your challenges in leading Wealth Enhancement?

I always tell my leadership team, “Let’s fail fast. Don’t hide it. Learn from it. Move on.”

Perfection is not the objective. The objective is creating momentum. We’re trying to create positive momentum that’s aligned for our roughly 1,300 employees.

What’s a big challenge?

We want strong, powerful people in our organization. Those are going to have strong opinions. So a leadership challenge every day is that you have to create alignment of strong-minded people. 

You have to say that it’s OK to acknowledge your failures. But be sure to always share with the organization how that relates to where we’re trying to go.

What are financial advisors doing correctly, and where do they need adjustment?

Successful advisors have a comprehensive approach to taking care of their clients.

There are two schools out there: planners and asset managers.

Planners that have taken a wealth management view are right-on with what consumers are looking for and what they value. 

For example, the idea of an advisor being a craftsperson to craft a plan that’s related to their life. That helps them align their assets with what their values and goals are.

And it means they have higher retention rates and higher referral rates, and there’s certainly less impact on fees.

What about the asset management approach?

Asset managers have been under fee pressure; wealth managers have not.

An asset manager doesn’t even think about crafting a plan related to the client’s life. They’re just thinking: What should we buy today or sell tomorrow?

Tell me about Wealth Enhancement’s purpose-mission statement.

There are three parts: The first is that we work together, taking care of each other and in the process, taking care of our clients. We’re very much a team culture, bringing a team of experts together in a cohesive way to benefit our clients.

The second part is that we improve the lives of our clients. They share things with us that they probably don’t share with anyone other than their therapists. Their assets are a foundation of the things that matter in their lives. And that’s filled with emotion.

The third part is the honor of being allowed into our clients’ lives by seeking to provide the best financial advice. We want to have the humility of being open to input on how we can get better.

When do you discuss the firm’s mission?

I talk about our purpose mission statement four or five times a week — in employee meetings, board meetings, when looking at acquiring a firm.

With so many new people coming in all the time, I have to double down talking about our culture and our purpose statement long before we ever sign a purchase agreement. We want to make sure we’re finding alignment with the people that are considering joining us.

How did your previous jobs prepare you for the role of Wealth Enhancement CEO? You weren’t with a financial services firm before.

I had really strong general management experience right off the bat. I was a brand manager at General Mills at 21, which was sort of a mini-general manager [role] with P&L responsibilities.

Then, when I was with Recovery Engineering for five years, we grew the company’s PUR water filtration system [business] quite rapidly. 

When the company was sold to Procter & Gamble, I learned how to grow an organization where the economic value may not be the year the customer became a customer. We were forward-thinking about how to make relationships work and how to finance that. 

Please elaborate.

I learned you have to invest in the front end and nurture a relationship that’s going to go on for probably decades or more. 

Then I spent some time in the tech space helping to grow the firms’ businesses, before joining Wealth Enhancement.

Who helped you most in your career?

Mark Addicks, who eventually became chief marketing officer at General Mills. He was a brilliant marketer and one of the greatest people I’ve ever met.

He told me that creativity was only valuable if it worked within the restraints of what was possible to do. That’s really powerful.

It matters if an idea you come up with is something you can actually use.

Are you helping anyone now?

I do a lot of internal mentoring. I have a saying that I tell my leaders all the time: “You have to make room on the stage.”

Sometimes leaders can get caught up in their own limelight.

We’re growing 30% or 40% a year. So we need to make room on the stage now. We need more people in our organization who have a taste for leading.

                           

Jane Wollman Rusoff

@jrusoff2

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.