Financial Advisor Success Ep 124: Insourcing Vs Outsourcing To Manage Overhead Expense Ratios While Scaling An Advisory Firm with Shirl Penney
May 14, 2019
Shirl Penney, co-founder and CEO of Dynasty Financial Partners, shares his inspiring entrepreneurial journey in wealth management. He discusses building a support platform for independent advisors, navigating challenges during the financial crisis, and the sacrifices made in the early days. Shirl elaborates on the importance of consulting services, revenue participation notes, and the dynamic between outsourcing and advisor independence. With a focus on mentoring and community, he emphasizes the drive for financial wellness in the industry and his dedication to creating shared success.
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Synthetic Scale Enables Independent RIAs
- Dynasty built a synthetic scale model to let advisors be independent but outsource middle-office at institutional pricing.
- Aggregating many RIAs spreads fixed costs and buys access to better tech, vendors, and capital.
Launch During Crisis, Long No-Paycheck Stretch
- Shirl left Citigroup in April 2008 and his family went 2 years, 7 months, and 4 days without a paycheck.
- Dynasty officially launched in December 2010 after educating the market about their non-roll-up model.
Outsource Middle Office When Scaling Costs Rise
- Consider outsourcing middle-office functions to a platform when specialized roles are intermittent and costly to staff.
- Paying ~15% of revenue for turnkey middle-office can reduce headcount and improve firm gross margins.