Transcripts

Episode 1: Big Producer FInancial Professional Paul Pagnato

Episode 1: Paul Pagnato 1/2 - $1b in Assets with just 45 clients

Announcer: Welcome to Big Producer Interviews, a regular podcast that allows you to listen in on an interesting conversation with one of the most successful financial advisors in the country. This podcast is designed as a resource for financial professionals, so please visit bigproducerinterviews.com to offer constructive criticism, suggest an advisor for a future interview and access the handout materials library. This podcast is available to you because of the support of Constant Client Flow, the company that harnesses the power of internet search to create a constant flow of new clients for financial advisors in your area. Now, let's listen in to this big producer interview, another real producer discussing transferable ideas. And thank you to Constant Client Flow for their support.

Paul Pagnato: Good morning.

Todd Taskey: How are you doing?

Paul Pagnato: Wonderful, yourself?

Todd Taskey: I'm also doing great, I really appreciate you participating in our interview and I know that your time is valuable so I'm going to jump right into questions, if I may.

Paul Pagnato: That's fine.

Todd Taskey: I know that your story is an interesting one and an aspiring one for everybody that's listening that really does want to increase the quality of their practice, and I really do want to spend a lot of time on the transition that you went through. But first can you give us a little bit of an idea of what your production has been for the last couple of years, and maybe just outline what your group and what your team is like?

Paul Pagnato: Sure. Our production last year was around four million dollars. We currently oversee and manage approximately a little over a billion dollars in assets. And that consists of 38 different families.

Todd Taskey: So there's about 38 relationships in that billion dollars?

Paul Pagnato: Correct.

Todd Taskey: and that last year that generated about four million dollars in revenue. How do you handle that, 'cause I know that you have a team that supports you? Can you kind of outline that for us?

Paul Pagnato: Sure, I'd be happy to go through how I got started in the business.

Todd Taskey: I think that's a great part to your story Paul, because four million dollars in production and almost a billion in assets is amazing. But for a guy who was a biology major in college I think it's really impressive. And what I want to outline during our conversation is for people to see that while you're a big producer on the top of the mountain, your beginnings were pretty much like everybody else who's out here listening. Correct?

Paul Pagnato: Yes, absolutely right. Well I do have a degree in microbiology and my first five years out of college was a microbiologist with McDonnell Douglas. Aand I enjoyed it a great deal, it was an awesome experience but you don't meet a lot of people when you're working in a laboratory. I'm much more of an entrepreneur. I like interacting with people. So I decided about fifteen years ago to make a career change. It was probably one of the most difficult things that I've ever had to do in my life. So going from the life sciences over to the business world. At the time I didn't have any marketing experience, very little asset management skills and experience, and this is all completely brand new to me. So I was very fortunate in joining a firm like Merrill Lynch that had a fantastic training program. And also equally important is they had individuals that would be able to be my coach and be able to be my mentor. So one of the things I actually mentioned is to anybody who's getting started or striving to go to the next level in our business, I think having a mentor or mentors is absolutely critical and helps.

Todd Taskey: It really speeds up the learning curve doesn't it?

Paul Pagnato: Big time, big time, yes. So I've been really, really fortunate, really blessed, to have a number of wonderful mentors and people to help me to get to where I am today.

Todd Taskey: Great, let's finish painting the picture of where you are today, and then I want to go back and talk about the early years. Can you give us a description of what your group is like now?

Paul Pagnato: Sure. We are a group that consists of eight individuals, and the concept behind it is a principle called unique abilities. So all eight people have really different and distinct functions on the team, ranging from myself being really the creator of the group and the team leader, and the one that really initiates the relationships that we bring on board, to an individual that is the point person, the main relationship manager for these 38 families. We have two analysts on the team. We have an individual who is our senior wealth planner who spends a majority of his time on asset management and doing due diligence with investment managers. We have a concierge, full time concierge, on our team with two individuals who have been in the business for 20 years each, and all they do is focus on administration and service for clients to make sure everything runs seamlessly, flawlessly. So it's just an unbelievable group that's been assembled over the last nine-ten years, and it's all predicated on this principle of unique ability. And what unique ability is, it's your God-given talent, it's what makes you special, it's what your genius is, and when you're in that element and you're doing your unique ability, people want to be around you.

Todd Taskey: If I was a client, would I have interaction with all the people on your team, or do I only interact with you?

Paul Pagnato: You're going to have interaction with a lot of the people on the team. If you have money you need wired somewhere, you'd be talking to a certain person. If you're planning a trip or going to make a large luxury purchase, you'd probably be talking to somebody else. But, at first, that could be kind of overwhelming to an individual, so at first you'll always have one point of contact for whatever your needs are. And that would either be myself or somebody else on the team that we termed the name "relationship manager." So there's always one point of contact that our clients can always go to, but what does happen over time is, you get to know the team and you'll feel more comfortable going directly to different people for what their needs are.

Todd Taskey: Which allows you to spend more time to either enjoying your success or focusing on your clients.

Paul Pagnato: That's correct. I do have more time now to enjoy things. But I will also say that when you're in this business you need to absolutely love it and be passionate about it. I love what I do and I can't wait to get out of bed every morning and to get here and do business and work with our clients, do what we do. So I think it's something that you have to be passionate about.

Todd Taskey: And I know from our other conversations in the past, I'm not sure that you necessarily felt that way to the degree that you did today. What I'd like to do, I know that there may be a lot of people listening and say, "wow this guy is really smart because he's a microbiology major and he's reached a level of success that is too far away for me to aspire to". But I know that you were a typical broker at Merrill Lynch or any other type of brokerage firm in the past. And maybe you could just take us through the first years or the early years of your practice so people can really get the sense that you were really, to a large degree Paul, just another advisor out there, correct?

Paul Pagnato: Absolutely. When I first got started because I had background in life sciences, I didn't come from a wealthy family myself. So I was really starting from scratch and I first really took a good two-three years. My first two-three years in the business, my philosophy was to meet with as many people as I possibly could. 'Cause what I did was I looked back and I said to myself, "If I was going to hire an advisor, and I was going to turn my money and my family's money over to somebody, what would need to have happen?" And there were a few things that I came to the conclusion of. Number one, I would have to meet the person and I'm going to have to feel very comfortable with them. The chemistry's going to have to be good and still like them. I'm also going to need to ultimately trust them, and I'm going to want that person to educate me on what it is and how my money is going to be managed. So the educational component is very, very important. And I'm also going to need to have a strategy. I'm going to need to have a game plan. So I'm going to need to understand why we're doing what we're doing. So because of that I developed the philosophy at the very, very beginning that I'm going to need to meet with people, I'm going to need to be extremely up-front and to educate them on their situation and what their expectation should be. And spend time with them and really understand what their true needs are. Because of that, my first few years in the business I really met with as many people as I possibly could to develop those relationships, and to have those kinds of discussions.

Todd Taskey: I know everybody talks about that. Finding out what the true needs are, all those kinds of stuff. And I know that you're always really honest and you do a lot of thinking about this. Was the work that you were doing in terms of digging in and really understanding clients, was it any different you think than the other guys in your office other folks in our business?

Paul Pagnato: Great question. Yes, when we meet with somebody, the first meeting really, I'm not talking about myself at all, I'm a hundred percent focused on them, and it's really important for the person to feel comfortable with you as you're having those discussions. And a lot of times it may not even really involve their finances. So really understanding what's important to them, what makes them tick. One of the first things that, one of the first discussions, that we have with a client is something that, we use the acronym DOFF[sp], this actually came from one of my coaches, Dan Sullivan, from the teacher-coach program. What we really need to understand is, what are the dangers, what are the fears, what are the concerns that somebody has. What's really keeping them up at night? And it might be financial related. It may not. Then we also need to really understand what do they feel their opportunities are. What do they feel the three greatest opportunities they face that they can benefit from over the next two-three years? And then also to understand what their greatest strengths are. What are their two-three greatest strengths that they feel they can possess?

Todd Taskey: I'm sorry, what if the danger that they come up with is not financial-related, what are you going to do with that?

Paul Pagnato: That's Ok. That's what's going to be really important to understand them, it's going to be important to understand who they are. Because at the end of the day when we work with them and we manage their money, we need to understand who they are as a person. What motivates them? What's really important to them about their money? What are the real concerns? Because a lot of times when people have money or there's new wealth that's been created, this is all brand new to them, and it could be very psychological. It could be very, very emotional, and a lot of times when you're experiencing something for the first time you don't really know what you don't know. And that's part of the art of what we do, and that's part of what people pay us for, is to make sure that we're assembling a portfolio for them that's not only going to enable them to achieve their goals and objectives, but they're going to be comfortable with. They're not going to lose sleep at night. So that is very, very important.

Todd Taskey: So were you doing that at that level right from the very beginning even in year one and two when you really didn't know much yet?

Paul Pagnato: First year one and two I didn't, I wasn't, my process wasn't as good because I was literally just getting started. But in the very beginning, yes, all I did was talk about them and what their needs are, what their concerns are, their risk tolerance, their previous experience, their goals and objectives. It certainly wasn't as refined as it is today, and that I think is one of the important things for all of us. The more time that we spend with people, and the more time of being with people and having those discussions, the better that we are, the better that we get at being able to obtain the information that we really need to understand someone to really do the right things.

Todd Taskey: So if I rewind a little bit back to year three, year four, year five in there, you're starting to have some success. You're starting to make some decent money. But you're also like a lot of us out there as producers. You're working six days a week. You're seeing anybody that'll see you. You're working the evenings when you need to. And you didn't have as much control I guess over your success as you do today. I think what's interesting about you Paul is that you made some different decisions and it obviously has brought you to a much different place than maybe a lot of producers out there who are listening. Can you try to focus in on that time when you made this transition and tell us, what was going on in your head and what was some of the first steps that you made? Because a lot of the guys I talk to say, "I know I should transition and I want to transition, but I'm really busy every single day with all the kind of crap that's going on in my practice right now." So what was going on in your head and what were the actual steps you took to transition yourself from a, let's call it an everyday type of broker albeit a successful one, to a guy that has almost a billion dollars in assets for less than fifty families?

Paul Pagnato: Sure, you describe that very, very well. What happens is, my first literally 2-3 years in the business it was 6-7 days a week, I'd be in the office in the morning by six am, I wouldn't leave until ten o'clock at night. Very, very long days. Weekends I had different hours but I'm still working. That was really for 2-3 years. What happens at first is you're a sole proprietor and you're doing everything on your own. So you're doing the marketing, you're doing the sales, you're doing the service, the asset management, the planning, you're doing it all. And because it's only you, it requires an awful lot of time to do all those things exceptionally for somebody. It's very, very challenging. But then what happens is that you do a good job for people, and your name gets out there, and after 2-3 years I established probably about 75-100 clients. And then all of my efforts, all of my time and energy was all about the clients, and adding as much value as I humanly possibly could to those individuals. So really from that point on it was all referrals and all networking.

Todd Taskey: Can you remember Paul, what year in the business and roughly what your income was, or what your production was when you hired your first person? And when I say production, tell me what your net worth was, roughly what your personal income was when you decided you're going to hire your first person?

Paul Pagnato: My income was probably roughly a few hundred thousand dollars, was probably 200-250 thousand dollars when I had decided to hire the first person. And that was quite sometime ago, the first person was hired probably, been in the business now 15 years, probably about 9-10 years ago.

Todd Taskey: And you remember what you had that person doing for you?

Paul Pagnato: Yep, sure do. And also back then, having a team was not in vogue. So it was a challenge to go to the process to be able to actually hire someone. But once I broke through that barrier and did hire someone, that person's function was to be able to free me up to spend more time on my unique ability, and my gifts. And so what that person did was really helped a lot of our clients on a day-to-day basis. So they would really be the point person for a good segment of our clients, and what that did is that it just elevated the level of service and the experience that those individuals were receiving. And then it freed me up to spend more time on the asset management and really some of the higher-tier clients.

Todd Taskey: And then you just continued to grow from there. I want to, if I can, you use this term of unique ability. And to be honest to you, to a lot of people it's going to sound fuzzy and touchy feely and those type of things. But you've gotten yourself to an amazing spot in your business by really focusing a lot of your personal energy into unique ability and a lot of your hiring decision on unique ability. Can you talk a little bit about that not in a touchy feely way, but how did you drive it into tangible things that you've actually done and can you start by telling us why it's so important?

Paul Pagnato: Sure. Unique ability is so important because that's what gives us all, we're spending time on unique ability that's what gives us energy, that's what gives us confidence, 'cause we know we're really, really good at it. And ultimately that's how we're going to make the greatest impact not only to our business and to our clients, but ultimately society. That's why it's so, so important. And I would say that's probably one of the number one differentiating factors between our business and a lot of other advisors and businesses out there.

Todd Taskey: Do you spend a lot of time talking to clients about unique ability and explaining to them how it plays a role in your practice and your service?

Paul Pagnato: Absolutely. When we do meet with someone, they typically ask us about our group and our team, and right up front I'll explain to them how we're built and the philosophy behind our team, being this principle of unique ability. Absolutely. And we do work on that, there's now eight of us on the team, and literally every quarter, every three months, we step outside, out of the business. We all spent so much time working in the business, it's important to remove ourselves from the day-to-day work, step out of the business and spend time working on the business. Those are two very, very different things. And when we step back and we look at how we can make the business better, how we can make it more efficient and more productive, it all gets all the individuals on the team and what they're doing, what their job function is. What we try to do every quarter is refine the functions of what each person is doing and putting it more and more aligned with their skill set, what they're really, really good at. Because if we do that, at the end of the day, it's going to be the very best experience for the client.

Todd Taskey: So can you give me an example of how would you describe your unique ability?

Paul Pagnato: My unique ability is creating, I love to create things. Whether it's creating this team, creating systems and processes, creating new relationships, that's my gift, that's my genius. So I'd like to be able to create. When you have the unique ability of being a creator, that tends to throw off a lot of stuff, tends to throw off a lot of work. And so we've assembled the team here of people that when these things are created, they can implement and execute and do it, and do it flawlessly. So whether it's how we're managing money and the systems and processes to manage money, to the reviews that we meet, how we meet with our clients. We meet with our clients every three months, so every quarter, and it's an experience when we meet with them, and how we report to them, what the meeting looks like, how it takes place, what we're saying to them, is absolutely critical. So the creation of that, to the experiences that we create for clients.

Todd Taskey: What do you mean by the experiences that you create for clients

Paul Pagnato: We certainly manage a lot of the aspects of our clients' lives, the asset side, the liability side, help with the planning. But in addition to that we now have a full-time concierge on our team. And if a client is wanting to take a trip somewhere, they will frequently call us, and we just had a client recently asked us that they wanted to plan a trip to Italy, and they wanted some help with that. We have another client who's going to be travelling over to Switzerland, and they need some help with that trip, and have someone on the team who's unique ability is just that, to be able to dig in to the best way to get there, where to stay, what to do. It's really, really neat. And that to me is more of a lifestyle experience for our client.

Todd Taskey: Sure 'cause it strikes me as it's got absolutely nothing to do with you doing a good job managing money. But it also strikes me that if I felt close enough to you that I would help you, that I would call you to help me arrange my family trip to Italy, I think that it would probably have to make the assets pretty sticky, no?

Paul Pagnato: Absolutely, we don't lose clients. And I think that is because of the relationship that we have, and creating proper expectations and all the ancillary things and services we provide our clients. We just don't lose clients.

Todd Taskey: You've really got to hear the second half of Paul's interview next week. His vision for what he wanted his business to look like, and then how he methodically went about accomplishing that, is a really great story and it's filled with important lessons that might help you improve the quality of your practice. Be sure to join us next week for the second half of this big producer interview.

Announcer: That was another great interview and we hope you enjoyed the conversation. Remember you can access a copy of the handout materials at bigproducerinterviews.com where you can also suggest an interview candidate and offer your constructive criticism. It is our intent to make this podcast better in the future and we welcome your input and suggestion. Remember this podcast is possible because of the support of Constant Client Flow, the company that harnesses the power of Internet search to create a constant flow of new clients for financial advisors across the country. You can find them at constantclientflow.com. We look forward to have you listen in to our next big producer interview, where real producers share transferable ideas.

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