The Importance of Relationships and Long-Term Strategies in Alternative Investments

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode welcomes two elite performers in Steve Young of HGGC and Scott Wood of True North Advisors, where they talk about how they formed a partnership based on shared values.

Steve’s private equity firm, $7B AUM HGGC, took a minority stake in Scott’s independent wealth management firm, $3.9B AUM True North Advisors, as part of their broader wealth management investment thesis.

After an illustrious 15 year Hall of Fame career as a three-time Super Bowl winning quarterback of the San Francisco 49ers, Steve embarked on second act to found HGGC that has rivaled his career on the field. Over the past 17 years, HGGC has grown to a $7B private equity firm that has completed 600 portfolio investments.

After working on Wall Street where clients were not being fiduciarily served, Scott's journey as a registered independent advisor started in 2000, when he and his partner Mark Gehlbach decided to pioneer the fee-only  model to eliminate conflicts of interest in the client advisor relationship. The foundation they built has led to the growth of a firm that now stands at over 3.9B in AUM, with a large portion of that capital, $812M allocated to alternatives. 

Steve, Scott, and I had a fascinating conversation about how they’ve built their respective investment firms, the importance of values and culture, and how they create abundant, fulfilling relationships. We discussed:

• Why “the score takes care of itself.”
• How and why defining the relationship up front is key in advisor M&A.
• How to assess culture fit when merging or acquiring advisors and wealth management firms.
• The importance of alternatives for better serving the client in an advisor’s practice.
• The concept of “decading” and why long-term thinking is critical in business and life.

Thanks Steve and Scott for sharing your thoughts and decades of wisdom on business building, investing, and partnership.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Show Notes

00:00 Introduction and Sponsor Message

01:17 Welcome to the Podcast

01:59 Meet the Guests: Steve Young and Scott Wood

02:22 Steve Young's Journey from the NFL to Private Equity

06:13 Scott Wood's Path to Founding True North Advisors

09:13 Building a Scalable and Collaborative Wealth Management Firm

12:22 Need for a Partner

12:57 Choosing HGGC: The Importance of Culture and Values in Business

13:30 HGGC's Investment Philosophy

15:03 Cultural Alignment in Partnerships

22:25 Evaluating Cultural Fit in Partnerships

22:40 Evaluating Cultural Fit

27:12 Governance and Day Two Operations

27:53 Commitment to Cultural Integrity

28:19 Navigating Cultural Fit in Wealth Management

28:55 Wealth Management Growth and Consolidation

29:40 The Role of Private Equity in Wealth Management

30:03 Changing Wealth Management Engagement

31:07 Challenges and Opportunities in Wealth Management Consolidation

32:22 True North's Unique Business Model

33:01 The Impact of Private Equity on Wealth Management

34:42 Exit Strategies and Long-Term Vision

39:39 Building an Alternatives Platform

40:31 Decading: Long-Term Thinking

40:53 Evolution of Alternatives Strategy

45:13 Simplifying Complex Investments

46:37 Fee Structures and Client Alignment

47:24 M&A Opportunities and Relationships

48:37 Mentorship and Professional Relationships

52:56 Future of Alternative Investments

55:56 Closing Thoughts and Reflections