Creative Planning President and CEO Peter Mallouk talks to AssetTV, where he shares what sets Creative Planning apart: providing planning-led custom solutions to meet individual client needs.
Watch the full interview below.
Transcript:
Jenna Dagenhard:
Hello and welcome to Meet the RIA. Joining us now, it’s an honor to introduce Peter Mallouk, he’s the president and CEO of Creative Planning which has been consistently named one of the top RIAs in the country. Peter, great to have you back with us.
Peter Mallouk:
It’s good to be back with you, Jenna.
Jenna Dagenhard:
So Peter, I’m sure most of our viewers are already familiar with Creative Planning, but for those who aren’t, could you just jog our memories and share a little bit more about the firm and your history and why you came to be?
Peter Mallouk:
Creative Planning has been around a long time. Our primary client is a private client and we’re managing their investments, providing financial planning for them. But we’re really a full family office where we provide legal, investments, tax, insurance, and planning, all for that typical client. We’ve got teams that serve people who have 50,000 and up, 500,000 and up, and even a 100 million and up at Creative Planning. And then we’ve got a different division that handles 401(k)s, institutional, so we have maybe 1.6, 1.7 million people that we serve in that way.
Jenna Dagenhard:
And Creative Planning has said that the financial planning system was broken, so you set them out to fix it. How have you gone about doing that, Peter?
Peter Mallouk:
I think that we’ve always been a needs-based advice firm. And so instead of choosing investments based on somebody’s age or the risk tolerance or something like that, we really try to figure out, well, what do they need and when do they need it? What’s their tax bracket? Are they going to move? Do they have outsized income sources? And so everything is planning-led, it’s “creative planning,” and we let the plan tell us how the investments should be positioned. And this works for people that have a very big high net worth and a very complex situation as well as somebody who’s got $500,000 and is really trying to make sure they become financially independent.
Really being able to account for all of those things impacts portfolio design and so we’ve always had an emphasis on planning. We’ve included it without a separate fee from the beginning. I remember when we did it, a lot of people in the industry said we were diminishing the profession by giving away the financial plan. Now it’s become a more standard. A lot of firms do that now to be able to compete, but that’s the main drive is to really make sure we know the client enough to advise them correctly.
Jenna Dagenhard:
Yeah. How does your team go about doing that, Peter? Given this wide spectrum of clients, how do you make sure that your team is coming up with the right plan for the right client?
Peter Mallouk:
We’re on the ground. So all our clients who have 500,000 and up, we’re going to see them, we’re building a plan with them, we’re getting to know them personally. And so it’s not an all-digital experience. Obviously we’re using technology to implement a lot of things, but really, if you want to get to know something, somebody, it makes a big difference to be able to sit across the table from them and get to know them, take them through a formal process so that whether someone’s coming to Creative from Florida or Texas or California or New York, they’re going through a similar process where we’re saying, “Look, this is how we think is the best way to get to know a client.” So we want everyone to experience that. So we make sure we’ve got the right information to advice people on, and then that standard process creates the custom solution that the client needs.
Jenna Dagenhard:
And you’ve seen tremendous growth over the years. What’s been the secret to your success?
Peter Mallouk:
We’ve probably…firms, independent, that provide wealth management, we’ve probably grown more than any other firm in the last 20 years, 15 years for sure. And I think a big part of it was leading the way of doing planning without a separate fee, is customizing portfolios, bringing all these key services in-house. Some others have started to do some of these things recently, but we had a 10, 15 year headstart.
And basically the things that we were doing from the beginning, it’s the direction that the industry has moved. And we were doing legal and tax and trust and all of that in-house almost, or well, 20 years ago. And now starting to see the industry move that way and in the way that we manage money, the industry is moving that way. And so I think that headstart has made a big difference and I think clients know who the leader in this space is when they want that custom portfolio management and that family office for all approach. I think that we’re getting that phone call a lot.
Jenna Dagenhard:
Any in-house secret sauce, any firm-wide mantras or anything else that you’d like to share with our viewers?
Peter Mallouk:
Well, there are a lot of things we’re very proud of that we keep private, but the deliverable, the things that we’re talking about here is a very big part of it.
Jenna Dagenhard:
And where do you think the industry as a whole is headed, Peter? You’ve seen a lot of change over the years and there’s surely a lot of change to come.
Peter Mallouk:
I have a little different opinion than most. I think a lot of people think we’re heading towards a world that’ll be like the investment banks or the brokerage houses or the insurance companies where there’s a few winner-takes-all and then everyone else goes away. And I don’t see it that way. I see it more maybe evolving like the tax world where there will be 3, 4, 5, 6 very, very large firms, then a lot of very good strong regional players, and then thousands of great smaller shops. They’ll all be able to compete in the same marketplace.
But look, if you’re smaller, you’re going to have to be doing something a little bit different to compete with the firms that have economies of scale and a broader offering and a deeper talent bench and so on. But we’re in the very, very early stages of that. I think we’ve got a long way to go to get even to where the tax world is, which I would still consider fairly fragmented.
Jenna Dagenhard:
And finally, what does the future look like for Creative Planning? How are you making sure that you are keeping up with all of your current initiatives and then also keeping an eye to the future?
Peter Mallouk:
We have a singular mission that we talk about all the time here, which is we want to be the best independent wealth management firm in the United States. That’s the objective, and whatever we have to do to accomplish that, we’re going to do whatever we need to do to accomplish that. And so part of that recipe is talent, part of it’s process, part of it is offering, and part of it is a lot of tactical execution of all of these things and being really good and efficient at that, being able to adjust very quickly. I think that’s in the DNA of Creative Planning and every three years we look very different than we did before. And we recognize, I think everybody at Creative recognizes that change is the only constant.
If the goal is to give the client everything that they need to really be successful, well, those needs change. So we have to constantly change for our clients to say, “Hey, we want to continue to be with Creative.” And for those of our clients that are advocates, which really make Creative Planning go and grow, for them to feel confident referring to Creative. And for prospective people to just reach out to us, they really have to believe that they’re going to get something more here from somewhere else. And so we’re constantly doing whatever we can to deliver more and more to them to meet or exceed those expectations.
Jenna Dagenhard:
Because they’re certainly expecting more and more as the years go on?
Peter Mallouk:
Yeah, the marketplace has completely changed in terms of what somebody’s expects or demands now from an advisor, the bar is much, much higher. And I think we’ve played a small part in making that so and I think that’s great. The clients have deserved a lot more for their fee than they were getting 10 years ago or 20 years ago from this industry. So I think it’s a positive trend.
Jenna Dagenhard:
Well, Peter, thank you so much for your time. Always great to have you.
Peter Mallouk:
Yeah, good to be with you again, Jenna. Thanks.
Jenna Dagenhard:
And thank you for watching. Once again, that was Peter Mallouk, President and CEO of Creative Planning. I’m Jenna Dagenhard with Asset TV.
