2023 Strategic Planning – Navigating Industry Challenges

By Buddy Doyle and David Williams

Spring Landscape with Winding Dusty Farm Road Through Canola Fields

Many Leaders are facing the same issues and challenges in today’s financial services industry: managing profitability, trying to hire good talent, and growing their business.  Whether you are a member of an executive team or a business owner, your strategic plan is a critical element to the success of your organization.

In today’s Oyster Stew podcast, Oyster CEO Buddy Doyle and Head of Business Development Dave Williams talk about challenges we are hearing from our clients, from managing the effects of industry trends and technology to succession planning.


Transcript provided by TEMI

Libby Hall:  Hi, and welcome to the Oyster Stew podcast. I’m Libby Hall, Director of Communications for Oyster Consulting. Many leaders are facing the same issues and challenges in today’s financial services industry, managing profitability, trying to hire good talent and growing their business. Whether you are a member of an executive team or a business owner, your strategic plan is a critical element to the success of your organization. In today’s podcast, Oyster CEO, Buddy Doyle, and Head of Business Development, Dave Williams, talk about challenges. We are hearing from our clients from managing the effects of industry trends and technology all the way to succession planning.  Let’s get started, Buddy.

Buddy Doyle:  Well, thank you, Libby. Welcome everybody to Oyster Stew.  I’m Buddy Doyle. I’m the chief executive officer of Oyster consulting, and I’m really pleased to be joined today by our head of business development. Dave Williams, Dave. Welcome.

David Williams:  Hey Buddy. It’s great to be with you today. Looking forward to our conversation.

Buddy Doyle:  And our conversation today is really going to be focused on leadership. And we’re going to talk through some of the challenges and issues facing leaders in client based financial services.  But don’t we all tend to face the same challenges anyway? Regardless of what industry you’re in, you’re trying to get good talent. You’re trying to grow your business. You’re trying to manage profitability and it’s been kind of an unusual few years here for doing that. Dave, what are you seeing out there in terms of our clients, who are starting to get into planning for 2023? Have you gotten any good feedback yet?

David Williams:  Yeah, absolutely Buddy. And maybe we can kind of begin today to talk a little bit about the planning aspect of running a business.  I think whether you’re on the executive team, whether you’re a business owner or you’re just generally part of the team, a strategic plan, I think, is a critical element of the success of any organization out there. Doesn’t matter whether you’re a small firm, a medium firm, large firm, you can be an RIA, you can be a broker dealer.  Generally you should be thinking about your upcoming year from a strategic standpoint, and most specifically from the creation of a strategic plan. I know we do that at Oyster, and I know we begin that planning process well into the year before.  Probably for our 2022 plan, Buddy, we started in late summer, early fall to make sure we had a plan in place to kind of map out what we were going to do in 2022.

And you know, when you think about a plan, about a strategic plan, you think about a couple different elements. You certainly think about growing your business. I know we had that in our plan. We wanted to grow our business by 20% in 2022. You think about improving efficiencies in your organization; you always want to become more efficient. You want to scale everything that you possibly can. And probably most importantly, we think about our teammates. And we also think about our clients. We think about how we are going to make it better for them looking forward to 2022 in this particular case. So I look at kind of what’s happened in the last seven months of this year. I’m hoping that all those listening to our podcast today have put together a plan. And they’re looking at that plan because a lot has changed in the first seven months of this year.

I think we’ve seen probably from a revenue standpoint that interest rates have returned to higher levels. And what that means is generally better revenue sharing if you’re a broker dealer out there.  But we’ve seen probably I won’t call it a bear market; I won’t call it a recession, it’s very difficult to define.  But we’ve seen really the first down market in a fairly long period of time though. We’ve seen a little bit of an upswing in the last couple of months, but you know, the previous, I guess, 10 years of our bull market, everybody looks good from a business owner, from a management standpoint, everybody looks good because your assets are growing.  Business is better, but when you kind of enter into a little bit of a downturn in the market, things aren’t quite as good as they have been. And you get a little bit exposed from a management standpoint.  But hopefully, firms have kind of planned for that as they thought about their strategic plan for 2022. Hopefully they’ve thought about how they’re going to react to the earlier market, the down swing in the market that we’ve seen to kind of react to that pivot, and kind of see how they’re looking forward to making those changes in 2022.

Buddy Doyle:  Yeah, I think the market has made 2022, anything but business as usual.  Because again, it’s been like most years, a year of good and bad.  But depending on your perspective, interest rates going up have been good for revenue sharing. It also sort of reset the risk premiums on the market and had a negative consequence on asset levels for a lot of firms, which is another good source of revenue as your assets. So you’ve got to really take a look at what’s going on out there and the picture isn’t really clear.  I think for any of us of what the future holds and it’s a little harder to read the tea leaves these days with wars going on and with interest rate volatility.  We’re in an election cycle.  There’s just a lot of different components of what’s going on here.

Not to mention we’ve still got COVID going up and down and it’s changed a lot of our employees’ mindsets about where they want to be and how they want to work and who they want to work with. So it’s really an interesting year for planning because your assumptions that you typically make, you’ve got to challenge those assumptions a little bit more than you usually do.  Because again, it just seems kind of unclear right now what the future holds. But I do think Dave just leveraging what we do here at Oyster and our planning process.  I think one of the keys that we’ve had to really focus in on this year is what are our metrics showing us. What are those key performance indicators looking like and keeping a closer eye on those things, as things really shifted drastically in the second quarter.   You just think about how differently it feels right now than it felt coming into to 2022.  You just want to make sure you’ve got your eyes wide open.

David Williams:  Yeah. And when you think about what has happened in the last seven or so months this year, Buddy, we’ve kind of focused on what the market has done.  As you well know the regulatory changes are ever present in our organization. The regulation changes, the challenges that are created by those changes, whether you’re an RIA or a broker dealer, are something that you always need to be thinking about.  That ever constant in our industry is regulation change. And it has pretty deep seated effects on the way business is done. And you can almost always expect some kind of change is going to occur from a regulation standpoint that is going to have some major impact on any industry or, excuse me, any business out there.

Buddy Doyle:  Yeah, absolutely. And I think that we’ve certainly seen a lot of regulatory change this year and some regulatory change that you may see in the future is actually in the present.  I think when you look at the major things that got put in recently with reg BI implementations, we’re seeing examiners coming around and checking on reg BI and asking questions about the details that they looked for in reg BI.  How are you supervising people hitting grid hurdles where they’ll get production bonuses, and is that still in the best interest? Those things may have slipped past you in the past and they’ll be right in the forefront here pretty soon if you haven’t addressed those.  But the DOL rollover rule has impacted a lot of firms.  That disclosure requirement became required this year.

Are you doing that efficiently? Are you doing that effectively? You can go back and look at some of these things. And Dave, we talked about efficiency early on. It’s really important that you comply with the rules because they exist. And if you don’t, it can be tough. If you’re in the gray area, it can be really expensive to be right with the regulator while you thumb wrestle with them. But I think that there’s some backward looking things that you can do about efficiency and effectiveness in managing your risk. And then there’s the forward looking things of what’s potentially coming next year. And how can I get prepared for that? I see there’s a rule proposal out there around how you disclose your ESG strategies and investments.  And ESG’s been a hot topic, positives and negatives, and people are on different sides of the fence there. But if you’re going to do it, you need to do it in a way that keeps you as safe as you can be from regulators and plaintiffs council.  While saying there’s a big opportunity to make some money out here and that’s really pulling it all together.

David Williams:  Yeah. It’s certainly an important area of our industry. And when you think about some other things, Buddy, you think about the dependencies that whether you’re a broker dealer or an RIA that you have on, I’ll just say vendor relationships, your primary vendor relationship is how you custody your business. You could custody it through an RIA type of relationship, you can custody it through a clearing type relationship. And you think about all the dependencies you have on those respective organizations that have a ripple effect throughout your entire organization. It certainly affects the way you process your business. It affects your advisors and how they interact with your clients, and it certainly affects their client relationships directly. And then you think about your technology dependencies, generally speaking, most firms use outside technology vendors to allow their financial advisors to serve their clients as well as they can. And that’s a dynamic, fluid area of our industry. That’s ever changing with vendors merging.  Just that whole technology space is an incredibly important aspect of anyone’s business out there today.

Buddy Doyle:  Yeah. And I think that’s another good component to talk about here.  Everybody wants to improve their technology stack because technology’s always improving. And I think when you look at this, especially in planning, a lot of firms sort of missed the entire effort and the entire cost of implementing new technology, which could include the project, the people to get that project done, communicating training, all of that. You’ll want to measure that all the way through so that you have a good plan that you can actually execute. You know, one of the great things about the leadership team that we have here at Oyster is it represents pretty much all facets of our client base. Our leadership team looks a lot like our clients do.  From their leadership teams, as far as the things we’re focused on, whether it’s finance and capital, through our CFO who also runs our FinOP and fractional CFO practices.

So we get great input there. We have our general counsel kind of keeping tabs on changing laws and rules and regulations. Ed Wegner runs our compliance groups. So he’s always out there in that area about the compliance and regulatory changes and the things that they don’t announce like changes in enforcement, focus or opinions, maybe some guidance that’s coming out there. And then Dave, obviously you’re business development, you keep us looking at the future and what the pipeline looks like and where the market is going. So we can kind of skate to where the puck is going. And then we’ve got Pete Bowman with the strategic planning and execution to make sure that you do it right. So, yeah. And of course I run the software business. Not everybody has a software business. Although if you think about it, you probably do have a software business because most of your clients are probably interacting with you through a piece of software digitally, at some point in their life cycle.  Either through performance reports or portals or things like that. So it really is we kind of have a similar view. We get input from all of those different areas, and then you have to challenge it and make the tough calls about what you’re going to invest in, what you’re not going to invest in, which is where the fun begins.

One of the interesting things about the financial services industry is that a lot of times your vendors also have these regulatory consequences and focuses on them, whether it’s your custodian or your clearing firm.  They’re in the business, right? They’re either broker dealers or investment advisors themselves. Sometimes they have both and they may have to make decisions that will impact you as an organization, as a client of their organization. And they can have some pretty big financial implications as we’re hearing more and more from regulators about these upcoming thoughts about payment for water flow, about sweeps and money markets and 12 BK fees. And there’s so many things out there that as regulators look for transparency, and fees, and risk and cost, you need to be focused on how you can achieve that transparency through disclosures, but also where you can’t. And there’s been a lot of talk about that as well, where you can’t mitigate the conflict enough to still be able to manage it. And we’re going to start probably hearing more about that as we come up. So do look at where your concentrated incomes are as well and ask yourself how you feel about that risk and what you can do to broaden that out.  That can be really important and has nothing to do with customer preference for products or investments or what the market’s going to do. But that is something you ought to be talking about in your meetings.

David Williams:  Historically we’ve only seen revenue compression.  Revenues are not getting broader and larger. They’re getting they’re shrinking and shrinking, and all the component pieces where firms had enjoyed revenue streams have either been greatly reduced or eliminated. And a lot of those revenue streams kind of flow or used to flow right down to the bottom line. And as you said, Buddy, the regulators are looking at that. And they’re looking at the transparency of that. And sometimes disclosing that is not enough for the regulators. They don’t feel that that’s in the customer’s best interest. So as you think about your firm and you think about the risks, the financial risks that you have going forward, you should be thinking about what was a constant may not be a constant anymore.

Buddy Doyle:  Absolutely. I think the future will be different. That is for sure.  We will not be going back to whatever normal is. I think normal doesn’t exist. It is now predicting the future a little bit ,dealing with the present, right? It is what it is, but you need to be thinking about how you’re going to react, should these things that regulators are talking about and focused on come to fruition.

David Williams:  You know, another thing, Buddy, as we’re out in the marketplace, our business development team, talking to business owners and we’re talking to their leadership teams, probably one constant, we are always hearing is what does succession look like in your organization? Many firms have been around for many, many decades. There’s usually a lot of legacy involved from family members in a lot of firms out there. And very few owners really focus on what is the next step in that organizational metamorphosis. But they’re certainly thinking about, where is their firm going? What should they look like? There’s a lot of different business models that are available today that weren’t even available five years ago. So as a leader, as a business owner, you should be thinking about where is your firm going? Is there going to be a possibility of monetization of my firm? What types of monetization models are there out there? Something that as an owner you should always be thinking about. Usually you’ve spent a lifetime of work, building your business up to a certain point. It might even be the biggest asset that you own. And then you certainly should put a focus on that as much as anything, any other asset in your portfolio.

Buddy Doyle:  I’ve taken good notes on that one, Dave. I think you just pegged me. It really is important to understand that transition plan, what the future holds, what the risks are to your organization because of key person dependencies. We’ve worked really hard to make sure I’m redundant here at Oyster. and we’ve done a good job of that. So that was one of the early things we tried to do. Make sure that if I go away, it’s a good thing for the film, but it really is a tough thing. And we’ve seen some bad things happen to business owners that accidents occur. You can be riding your bike and then you’re not. And what happens to your client base, to your business, and to your family is really important to understand. So do take care of those details.

So that’s all the time we have for today. Thanks for listening. We really do appreciate it and we hope you’ll tune back in for future podcasts.

Libby Hall:  Thanks everyone for listening. If you’d like to learn more about our experts and how Oyster can help your firm visit our website @oysterllc.com. And if you like what you heard today, follow us on whatever platform you listen to and give us a review.  Reviews, make it easier for people to find us.  Have a great day.

About The Podcast Speakers
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Buddy Doyle

As the CEO of Oyster Consulting, Buddy Doyle has led the charge to create a successful organization built on the belief that transforming experienced industry practitioners into consultants adds more value to our clients.

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David Williams

David Williams is responsible for the leading the firm’s growth strategy. David’s team collaborates with broker-dealers and RIAs whose needs match with Oyster’s expertise.  The goal is to implement solutions that result in successful outcomes. David also works with major platform providers and large institutions on strategic initiatives including current state assessment, future operating model, clearing, platform evaluations and succession planning.

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