Creating Smart Investment Solutions - Greg Kushner of Lido Advisors - Eversprint

Creating Smart Investment Solutions – Greg Kushner of Lido Advisors

Greg Kushner, Founder and Chairman of Lido Advisors,

Greg Kushner, the Founder and Chairman of Lido Advisors, grew his company’s company’s AUM from around $800 million in 2014 to $2.7 billion in 2017, a 238% increase, and to around $4.1 billion in 2018.  

 Lido Advisors is an independent registered investment advisor.  

In this interview with Eversprint‘s Malcolm Lui, Greg shares how he and his team accelerated their high value sales by:  

  • Providing alternative investment solutions that go beyond just stocks and bonds.  
  • Hedging to reduce the downside risk of client portfolios.  
  • Capitalizing on the momentum of their rapid AUM growth, which has made it easier to win larger clients.   

Computer generated transcript - Lido Advisors Interview transcript powered by Sonix—the best audio to text transcription service

Download the "Computer generated transcript - Lido Advisors Interview audio file directly. This Computer generated transcript - Lido Advisors Interview was automatically transcribed by Sonix (https://sonix.ai).

Computer generated transcript - Lido Advisors Interview was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text in 2019.

001 Malcolm Lui.mp3:
Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Greg Kushner, the Founder and Chairman of Lido Advisors, an independent registered investment advisor with over $4 billion in assets under management. Welcome to the show Greg.

002 Greg Kushner.mp3:
Hi, Malcolm, thanks so much for having me on the show today.

001 Malcolm Lui.mp3:
Greg, you grew your company's AUM from around $800 million in 2014 to $2.7 billion in 2017, a 238% increase, and in 2018 you hit around $4.1 billion. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

002 Greg Kushner.mp3:
Sure, Malcolm. Our company was founded 20 years ago in 1989 after I left public accounting and I was actually spent three years working for a very, very wealthy family in Beverly Hills, California. And I realize that there are a lot of people with a lot of wealth out there, but they weren't really being well served by the large brokerage community. So I set up an independent investment advisory firm or a registered investment advisor registered with the S.E.C. And basically what we do is we help people manage their wealth. And remember, I didn't say money management, although that is what we do. We really manage their wealth. So we look at all aspects of their financial well-being exactly like these very, very wealthy. We call them family offices. If you have hundreds of millions or even billions of dollars of wealth, you hire a whole team of people called a family office to manage your money. And so little advisers was formed really as kind of that that opportunity for clients who have substantial wealth, but not hundreds and hundreds of millions of dollars of wealth, but maybe a million, five million, 10 million. We do have clients north of 100 million dollars and more. But the idea is the same. We want to be able to help individuals with a much more sophisticated approach to wealth management than is typically available through the wire houses, the large Wall Street firms. And as you said, you know, our growth has been tremendous. And I think offering this kind of unique approach has really been one of the reasons for that incredible growth that we've been able to enjoy over the last dozen years or so.

001 Malcolm Lui.mp3:
What would you say were the three biggest drivers of your AUM growth from 2014 to 2018?

002 Greg Kushner.mp3:
Well, one of the things that we hear over and over when we meet with prospective clients is, wow, you guys are really different. You know, I've talked to these other competitors and some of the Wall Street firms and they all pretty much say the same thing. You know, that's not what they actually say, but this is what they are implying. They have very, very deep research and they like to buy stocks low and sell high. Oh, really? Well, that's a fascinating concept. You like to buy low and sell high. Let me write that down. Amazing. Now, obviously, I'm being facetious, but what they offer typically is, well, the stock market does well. You'll do well. The bond market does well. You'll do well. They typically allocate your out, your money, something like, you know, 60 percent stocks and 40 percent bonds. And they'll say, oh, you're very diversified because we have international and we have small stocks and large stocks. And the reality and we saw this in 2008, all these investments had a correlation of one. In other words, they all kind of went down together and diversification kind of was thrown out the window. And what we do, I think, which is really a differentiator, is we actually do things that will perform well or perform differently in different market conditions. So, for example, for many years we've been investing as a lender against real estate. We find opportunities through different third party vendors where they will make loans secured by real estate. And these are all short term bridge loans and they will pay a pretty high interest rate somewhere between 7 and 9 percent a year. And if the people don't pay, the operator then foreclosed on the building. And that's obviously a pretty high motivation for the borrowers to, as I like to say, beg, borrow or steal to figure out a way to pay off the operator, pay back on these loans.

002 Greg Kushner.mp3:
And so that's been an example of a differentiator where we do that, where a lot of these other firms don't have the bandwidth or the expertise to do so. Another thing that we've been doing a lot of over the last couple of years as the market approached and hit all time highs is we do a lot of hedging where we have investments in the stock market and we have the more traditional kinds of investments in the market. But we also do a lot of hedging. So that should the market drop like we saw in the fourth quarter of 2008. This portion of the portfolio virtually did not go down at all or very minimally because of the hedges that we put on. And so clients really liked that. If you think about, you know, the fear of missing out pharma, as they call it. Individuals have a greater fear of losing money than they do of not making money. And, you know, as by definition, if you're a client of our firm and legal advisors. You obviously have a lot of wealth, you've accumulated our lot of wealth, and as I like to tell my clients, our job is to make sure you stay wealthy. And the best way to stay wealthy is not lose money or lose a lot less when markets are really poor. I think that's really been the driver of our growth. That's what I've been told by prospective clients at least, and clients. They really appreciate that are kind of out of the box thinking that we do. And I find that very few, if any, of our competitors do.

001 Malcolm Lui.mp3:
All right. I know I have my notes here. Two drivers, one that you will know for your clients portfolios, you will consider other investments other than just stocks and bonds. And the second one is that, yes, a hedge against downside risks. Is there a third factor behind your growth?

002 Greg Kushner.mp3:
Well, I think one of the things is growth begets growth larger, you get kind of more opportunities you have you know, if we were eight hundred million dollar firm, getting one hundred million dollar client is a lot harder than when you're a four billion dollar firm. That person is not such a large percentage of your of your book. I guess the other thing I would say is we've been successful in developing relationships with third parties whereby they have vetted Leto advisors and have when they have clients situations where they need more advice than their they can offer. They've partnered with Leto and then we end up coming in and providing the wealth management services. And that's been also a nice driver of our growth.

001 Malcolm Lui.mp3:
Right now, the growth group grew tremendously from 4 billion into 2000, 18 in assets under management from 800 million in 2014, rather than, say, that 800 million a year in 2014, four point one billion in 2018. Was that all done organically or did you have some some acquisitions that help add to your book of assets?

002 Greg Kushner.mp3:
Malcolm, that's interesting question. It's all been organic to date and that makes the growth even that much more amazing to me. We are actually now in part going as because we have this size and we're able to go after other smaller firms or advisers who have a relatively small book of business and want to kind of plug and play and being part of a much larger and much more sophisticated firm and where they may currently be. So that's all organic with the exception of a firm that we acquired at the beginning of 2000 and 19. Actually, we we acquired a firm in San Diego, California. We've been working with them for about four years, kind of on a kind of a handshake basis, if you will. And we made that official, you might call it. We were dating for four years and we finally got married. Or I guess you might even say we were living together for the last four years and we finally made it official and got married. And but we are, like I said, finally looking to strategically add to our book, to our business through acquisitions. We just currently sign and close the deal that will become effective October 1st. Where we lift it out basically is what it's called, a fixed income group out of a a bank out of the Colorado area. And they're actually in L.A. based team and they are going to join us on October 1, adding to our our firepower and our fixed income trading department. So that's that's an example of where we will have some inorganic growth going forward, where we can strategically add to our U.N. and to our team with bringing our great talent.

001 Malcolm Lui.mp3:
Right. Another interview I had with another investment manager. He mentioned how he said he foresees a huge opportunity in acquiring the books of many other smaller shops because many of the advisors are approaching retirement age.

002 Greg Kushner.mp3:
Yes.

001 Malcolm Lui.mp3:
So he's a physician, his company to take advantage of that, making it easy to do the transition, making it easy to start building a relationship today so that when they do the handoff, it's very smooth in the client's eyes. Be working with people all along. So anything different is that the primary adviser owner will be stepping out and how will you be taking advantage of that opportunity?

002 Greg Kushner.mp3:
We are absolutely doing that. That's a very, very well-known trend in our industry. There's the aging of the RIAA space in the adviser world is very well known and there are many, many people out there who have really not created a good succession plan for their business. And so those are. And I agree with the other gentleman you were interviewing. It is a great opportunity. And we are looking for those situations actively across the United States. We're not just an L.A. based firm. We have offices across the United States and clients across the United States. So really, wherever there is a good opportunity to find good talent and a good business, we would be interested in talking to those folks. In addition to the folks approaching retirement, there's lots of firms out there, relatively smaller firms that just can't figure out how to grow and they get frustrated. And many times those are good candidates for us to talk to as well, because we obviously do know how to grow the business. We do know how to make things happen, if you will. And so we have we've talked to a few folks who really love what they do, but they don't want all the aggravation and administrative burden of running a small business.

002 Greg Kushner.mp3:
For example, the regulatory aspects of our business are very, very stringent. And we take compliance very, very seriously. And we have a very strong team. They could just join our firm kind of plug into our compliance department. They can do what they like to do, which is really just work with clients or bringing in new clients and not have to deal with the reporting and compliance and administrative and payroll and all the other aspects of running a small business. So we've actually talked to a couple of folks and we are in negotiations right now and we'd love to find other firms like that who can't grow but want to continue to be in the business. So it's a kind of a multifaceted approach to our growth, folks looking to retire, firms that want to grow, or maybe people who don't want to deal with the administrative hassle and of course, continue our strong organic growth.

001 Malcolm Lui.mp3:
So how we go about finding these advisors, these shots, they're having trouble growing or the principals are approaching retirement age.

002 Greg Kushner.mp3:
There is a lot of folks kind of dedicated to that industry out there. Executive recruiters and other investment bankers. And so, you know, we're we're actually relatively well known in that space. Again, because of our size. We're you know, we're certainly within the top 100 largest all rise in the United States, according to a magazine just recently published, and that's out of over 12000. All right. So as you might imagine, a very fragmented business. So I think through recruiters primarily or other investment banks that we work with, that we are getting opportunities to meet other advisors. Also, some of the custodians of the world, the Fidelity's and T.D. Ameritrade, et cetera. They many times will if they know that an advisor like us are looking for what were called tuck in advisors, they will if they're talking to folks, they will kind of make that introduction as well, because it's to their benefit if those assets stay within their custodial platform.

001 Malcolm Lui.mp3:
Right. Does marketing help in finding these people as well? Any sort of advertising or outreach to.

002 Greg Kushner.mp3:
Well, we really don't advertise so much in that it's just more word of mouth, and like I said, through the through the networks of people out there. It really is more of a situation where we know a lot of firms through. And for example, one of the one of the executives that works for my firm spent many years working at one of the large custodians. And so because of his prior job, he knows a lot, a lot of smaller RIAA. So he's out there kind of beating the bushes to try to find advisors to bring into Leto Advisors.

001 Malcolm Lui.mp3:
Right now, why not do marketing and advertising to help find these people?

002 Greg Kushner.mp3:
Well, it's just a very I guess if we could targeted. We probably should do something like that today. We haven't needed to do that and that's why we haven't done it so far.

001 Malcolm Lui.mp3:
Right. And how about on the organic side? How do you go about finding new clients?

002 Greg Kushner.mp3:
Well, you know, the nicest, of course, way is to get a referral from an existing client. We've been very successful in in that getting client referrals from our existing book. That's always a wonderful acknowledgment. We have a very, very high retention level of our clients, which is also a very important metric that I look at and study. It's not very exciting if you can grow your business. On one hand, you're losing clients. On the other, it's, you know, it's the cost of acquisition and the startup time is so, so significant. You don't want to lose clients. So we've been very, very fortunate that we've we have a very high retention level of clients. The organic growth also comes from Centers of Influence CPA. As I mentioned in my background, I'm a CPA by training. So for whatever reason, CPA, I feel very comfortable working with our firm and referring their clients to us. I think those those magic initials after our names seem to provide us additional credibility, which is great, by the way, two of my other partners are also CPA. So that that helps. Again, I am licensed in the state of California, but I'm what they call inactive. I don't practice as a CPA any longer. But I guess once you're once you're a CPA, you're always a CPA. So knowing the tax laws and the state planning and and kind of the whole financial planning, which I've been doing for well over 30 plus years, I guess the accountants really feel comfortable with that. Again, I don't want to do tax returns. I don't do I don't give tax advice. I don't do those things that the accountants do, but they feel very comfortable working with a firm like ours.

001 Malcolm Lui.mp3:
Right. I can definitely see that the CFA charter similar once you're a CFA charter holder here. You can continue using it forever as long as you pay your dues and, you

002 Greg Kushner.mp3:
And

001 Malcolm Lui.mp3:
Know,

002 Greg Kushner.mp3:
We

001 Malcolm Lui.mp3:
Required.

002 Greg Kushner.mp3:
Have a number of surveys that work for us, so we have some really smart people, I think one of the things that I'm I feel is most rewarding is our firm has grown is that we've been able to hire some amazing, amazing talent. I just feel like right now we have such a great team throughout our organization and obviously we keep hiring ahead of the curve as we keep growing. We want to make sure we've got the proper staff to continue to give what we like to say that kind of white glove service that our clients or are used to. So. But we have some really smart people that work for our firm. And certainly the CFA charter holders are amongst the amongst those.

001 Malcolm Lui.mp3:
Yeah, definitely. Now, how about other trends? I mean, you talked about the well-known trend of the retirements of the of the aging advisors and any other big trends you see that you can take advantage of or perhaps want to get out of the way because they are not in your favor.

002 Greg Kushner.mp3:
Well, one of the things that are not in the favor in general is there are not enough advisers coming into the industry. So, you know, being able to train young advisors has really been important to us. We have a number of pretty young folks working for Alito on the advisory side that have really grown within our firm over the last five, six, seven years. And that's a trend that has been out there. And I think maybe some of the colleges need to do a better job of helping people understand that the financial industry and the registered investment advisory business specifically are what we call the fiduciary side of the business versus the broker dealer side is an attractive career path. So that's something that I would love to get that word out as well. As far as just other trends. Certainly, there's lots of people who talk about alternative investments. A lot of people talk about ways to protect the assets. But I think a lot of it is just that it's just talk and it's really more of the same old, same old. And you have to be creative and opportunistic in the way you invest clients money. What we did five years ago is certainly different than what we're doing today. And if we look out five years from today, I'm sure our portfolios will look quite different. So I find many people in our industry have a mentality of kind of it's always been done this way. Kind of a set it and forget it approach. And I just find that that that just doesn't work. You're not serving your clients with that kind of approach. I know there's a lot of people to do that. They maybe have a lot better golf game than I do. They can set it, forget it. Go play golf. My golf game is terrible. And as I like to tell my clients, if you're money managers, a scratch golfer, you better get a new money manager.

001 Malcolm Lui.mp3:
Hey.

002 Greg Kushner.mp3:
And so when we play golf that occasionally, which doesn't happen all that often, they know that I'm not spending too much time on the golf course. Very clearly, they know that.

001 Malcolm Lui.mp3:
Yeah. You bring me on board. Don't know that for sure as well. Have to be cleared off with me.

002 Greg Kushner.mp3:
Yeah.

001 Malcolm Lui.mp3:
You'll be the first and last time they play golf with me.

002 Greg Kushner.mp3:
Yeah. Area.

001 Malcolm Lui.mp3:
Now, another trend that another manager, a different money manager makes to me is the a kind of briefly talked about it as the succession of assets isn't a huge amount of assets being transferred from one generation next. That's coming. Right. How are you positioning the firm for that?

002 Greg Kushner.mp3:
Well, there are and the studies all show the same thing, that a high, high percentage of assets. When somebody passes away, leaves your firm because you haven't done a good job getting entrenched with that next generation. And I would say that we've done an OK job. We probably could do a better job of that. But one of the things that as I mentioned earlier in our conversation, you know, we really are a wealth manager and not a money manager. And one of those things is really trying to get involved with the estate planning and understanding what what makes the clients tick and try to build relationships with that next generation. One of the things that I find that we're particularly adept at is understanding estate planning. For example, we have, for whatever reason, a number of widows as clients. And when there is a when there's a death, there's usually multiple trust. They're set up and there is a lot of things that have to go on. And so we as financial planners and as CPA, as we understand what these things mean and why we might invest money differently in, let's just say, an exemption trust or a bypass trust, which is kind of geared for the next generation versus marital trust, which is obviously set up for the the surviving spouse who might need a lot more income. The other portfolio might be invested more for growth. So we understand estate planning. We understand that all assets are not necessarily appropriate for all situations. And so, you know that that's something that is really important for our clients.

001 Malcolm Lui.mp3:
Right. One of the other people I interviewed for his firm there actually focus on hiring a lot younger folks to help cater to the next generation. Is that something that to.

002 Greg Kushner.mp3:
Well, it's interesting, Malcolm, if I can interrupt. Our largest client has two adult children. This is a a family who is a multiple generation. You know, their great grandfather set up a business and set up trust in the 1930s. And they are the beneficiaries of a very large trust that was distributed a few years ago. And they really, truly want to have there to just post college aged children. Just recently on their 20s be involved. And so we have a meeting every quarter. And the kids come to the meeting and we actually on our team have a twenty seven year old advisor who who comes to all those meetings, because I want to have that adviser have that relationship with that with those two kids. So it's exactly something we've thought about and we're doing, at least in that in some instances.

001 Malcolm Lui.mp3:
Right now in terms of. How that generation does does things differently, right? How you adjust, how your business operates, are you going to be going more digital, providing more digital platforms, do more communications digitally as opposed to in-person? What's

002 Greg Kushner.mp3:
Yeah, I

001 Malcolm Lui.mp3:
Going on

002 Greg Kushner.mp3:
Would

001 Malcolm Lui.mp3:
In?

002 Greg Kushner.mp3:
Say for sure. I mean, you know, a number of years ago, we didn't really do much on a digital platform, but we are currently much more so. We have a client log in portal. We can push things out to to phones and things of that nature. So we are, I think, relatively ahead of the curve as far as digital. But I think we could probably do a little bit better because you're right. You know, that generation is not going to want information the same way that our current generation of clients want it. So, you know, we are adapting and we are moving towards that. But I'd say we have a little bit more to go on that.

001 Malcolm Lui.mp3:
Right. But would you say is the biggest difference between the two generations in terms of working styles?

002 Greg Kushner.mp3:
Well, I'd say certainly the millennial generation have a little bit different view of what kind of work life balance. You've seen this in lots of companies have offered kind of flex time and unlimited vacation and things of that nature. I just don't see quite the same work ethic that I saw in older and older workers. And that's a little concerning. And obviously it's a very, very broad generalization. The other the other concern about millennials is that, you know, they want to move up that corporate ladder very, very quickly. Oh, yeah. I've worked here six months. I should be the CEO by now. And I'm being again, a little facetious, but those are the kinds of things that I think as any employer, you know, dealing with millennial employees realizes that you can't operate the same way you did, you know, 10 or 20 years ago.

001 Malcolm Lui.mp3:
Right. Yeah, totally agree. I agree with you on that front as well. Three last questions for you, Greg. First one. What message would you show on a billboard along the freeway? It's only going to be seen for six seconds or less.

002 Greg Kushner.mp3:
Well, that's a tough one, six seconds. Well, I guess I would say call Alito advisers for sophisticated wealth management.

001 Malcolm Lui.mp3:
All right. And the last two questions, who were your ideal clients and what's the best way for them to contact your company?

002 Greg Kushner.mp3:
Well, our ideal clients are primarily high net worth individuals, someone with at least a million dollars of liquid net worth. Ah, I would say we have some charities as well, endowments, but primarily high net worth individuals looking for sophisticated wealth management. As I say, holistic wealth management, white glove kind of treatment where we look at all aspects of your wealth. People who really want to have a trusted adviser, someone who they can rely on to make sure that all aspects of their financial well-being are handled and someone that they feel very comfortable with because this is clearly very important. You know, and trusting your lifelong savings to somebody. So it's those would be the primarily kinds of clients that we would not be interested in. If you want to look at it from a reverse angle would be those kind of. I call them the do it yourselfers, the ones who are looking at their stock screens, you know, moment by moment deciding to buy calls on Apple or sell puts on Google or whatever it might be. Those are not typically good clients for Alito. The clients that we work with are really I mean, certainly, as I say, it's not rocket science. They could certainly invest their own money. But our best clients are those who really want to make sure that we can look at all aspects of their wealth and make sure that they're well taken care of to make sure they meet their financial goals. And the best way to contact us would be through our Web site. Certainly. And that's Leto advisers dot com. That's Elle ideas and dog o advisors dot com. Or you can call me directly at in our Los Angeles office at 3, 10, 2, 7, 8, 8, 2, 3, 2, ext. One hundred. And again, we have offices throughout the United States, but you can call me in Los Angeles and I'd be happy to connect you with one of our local representatives if you're not in the Southern California area.

001 Malcolm Lui.mp3:
All right. Greg, it's an awesome having you on my show today. Really enjoyed hearing how you grew your company so fast.

002 Greg Kushner.mp3:
Thanks, Malik, has been fun. I really appreciate the opportunity. Thanks so much.

001 Malcolm Lui.mp3:
We've been speaking with Greg Kushner, the Founder and Chairman of Lido Advisors, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

Quickly and accurately convert audio to text with Sonix.

Sonix uses cutting-edge artificial intelligence to convert your Computer generated transcript - Lido Advisors Interview files to text.

Thousands of researchers and podcasters use Sonix to automatically transcribe their audio files (*.Computer generated transcript - Lido Advisors Interview). Easily convert your Computer generated transcript - Lido Advisors Interview file to text or docx to make your media content more accessible to listeners.

Sonix is the best online audio transcription software in 2019—it's fast, easy, and affordable.

If you are looking for a great way to convert your Computer generated transcript - Lido Advisors Interview to text, try Sonix today.

Listen on Google Play Music
Listen to Stitcher
Share on facebook
Share on google
Share on twitter
Share on linkedin
Scroll to Top