Guests: Scott Hanson and Pat McClain, founding principals of Allworth Financial.

In a Nutshell: There’s an old bit of sage business advice about getting a partner: Don’t!

My guests today are an exception to the rule (err, joke). Over their 30-year partnership, Scott Hanson and Pat McClain built Allworth Financial from $10 million to $20 billion in AUM.

On today’s show, Scott and Pat explain how they leveraged their complementary skillsets and their clear set of shared business objectives to establish a compelling vision and strong corporate culture. They’re also extremely candid about the personal attributes that have fueled their extraordinary success, including ego, insecurity, fear, and money, as well as the rather humbling realizations that helped them step back from their co-CEO roles.

.Scott Hanson and Pat McClain discuss:

  • The origin of Scott and Pat’s “accidental” partnership.
  • How Scott and Pat used their complementary skillsets and divergent interests to divvy up management responsibilities.
  • How Scott and Pat’s thinking about hiring has evolved from their early days through their enormous growth.
  • Managing conflict and why the most “passionate” argument wins.
  • The strengths and weakness Scott and Pat relied on to grow the company, and to admit when it was time to step away.
  • Leveraging ego and insecurity to fuel accomplishment.
  • Using personality to create culture.
  • What Scott and Pat would change about financial services if they could wave a magic wand.

. Quotes: 

Scott Hanson on forging productive relationships with partners:

“We all have partners. So we’re business partners together, but we also have other partners. We have custodians, they’re our partners. We have our products that we use, they’re our partners. We have our software vendors, they’re our partners. And so part of it for us is to understand, what does success look like for our partners? What do our partners need in their business models? And for them to understand what we need in our business model. And then how can we get an agreement together that’s going to serve both of our interests so we can all win?”

Pat McClain on doing what’s best for the business:

“Our goal when we started was to get $100 million under management within five years. We hit that number in two years, a year and a half or something. It was pretty quick, but that was the goal. And so every time the chaos comes up or there’s a disagreement, you try to leave ego out of it. It’s gotta be what’s best for the business, not what is best for the individual, right? And if it means stepping down, or moving aside, then so be it. And I think that was evident when both Scott and myself stepped down as co-CEOs of the company, six or seven months ago. Which, by the way, it was a little bit of a blow to my ego, when I realized that this company had grown past my abilities to run an organization of this size, and that it was best for everyone involved, including the employees, and the clients, and me and my family, for me to step aside. And Scott and I had a conversation, and then Scott said, ‘I should step aside too.'”

Scott Hanson on the need for a marketing machine that promotes business development:

“That is the key to growing. If you look at our industry, in 2023 the RIA space had no growth. (Editor’s note: Schwab’s 2024 RIA Benchmarking Study shows mid-single digit organic growth in 2023 among the firm’s surveyed by Schwab). And firms that were growing were all the large firms. They were taking the market share from the small firms, most of them on a custodial referral. Unless the organization itself takes responsibility for at least some of the business development, i.e. finding new clients, firms are not going to grow because an advisor who hunts and eats what he kills, they eat and then they get full. Their client book is full. They don’t have the time to go out and prospect anymore. They get stuck, and that’s why most firms don’t grow.”

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