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United Capital's Joe Duran: Imitating Starbucks

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For Joe Duran, the CEO of United Capital, the roll-up era is just getting started. His firm has surged to prominence by buying RIAs, and plans to increase its advisor count aggressively this year.

Duran wants to add advisors in the Midwest and increase AUM by more than 40%. "Our goal is to be the singularly biggest independent wealth counseling firm in the country," he says.

United Capital wants to stand out from competitors like High-Tower Advisors by offering a unified experience to clients, regardless of which branch they walk into. The company is spending heavily on technology and training to make sure, he says, all its advisors deliver the same "Starbucks experience" to clients.

Below is a condensed version of Financial Planning's conversation with Duran about the direction of his firm and the industry.


What is guiding United Capital's approach?

There are two things we see happening in the marketplace. First, the actual consumers are changing and their expectations are changing, but our industry is product based and very dictatorial. Really, things are done to a client, rather than having them participate, and that model is breaking down. We don't think people feel good about their money, and they don't feel good about the way their financial life has unfolded, and they're looking for something different. That's the overarching theme that we think touches everybody.

The second one is that size matters. There is a huge level of competition not just for brand awareness, but also for just making the business work. It is very difficult for a one-man advisory firm or a partnership with $200 million or $300million to make it because of the incredible complexity - not just operationally and with technology and compliance, but the shifting marketplace. And how do you offer services to clients that actually improve their lives?


A lot of brokers have left the wirehouse channel looking for something else. What do you provide?

While I'm not a huge fan of the full-service brokerage firm, if you are an advisor there, you get to spend almost all your time on clients. And then when you shift, even though your payout might increase, your costs to replicate what the wirehouses have - the rent, the lights, the overhead, the compliance, the technology, all of those pieces - are very high. But, most important, your time now goes from sitting with a client to working on the back-office side of the business, which generates no revenues. So you have this double whammy. First, you're an unknown brand. But, more important, you have to allocate all your time to the side of the business that you're really not that good at.

That doesn't work well for advisors. And so the revenues stay the same. They never really grow and they hit this growth plateau. When firms join us, our underlying assumption is we've got to free up their time and allow advisors to do what they're great at. And we've got to have our brand help them, not hurt them.


United Capital is seeing rapid growth. How do you see it playing out this year and next?

We have a consistent history of growth at 40% or greater. We went into last year with about $5 billion in assets, and we're going into this year with over $8 billion. Our goal is to be the singularly biggest independent wealth counseling firm in the country and to offer clients a way to actually feel good about their money and to develop tools that no one else can.

We've invested millions of dollars in our client experience, and we think the future of the industry is like Starbucks rather than lots of little mom-and-pop coffee shops. There will be a couple of dominant national brands that people come to trust and respect, unlike the big wirehouses that are out there today.


What does the Starbucks experience mean for United Capital?

When a client walks into one of our offices - across the country - they're going to have a very similar experience. It's going to be all about them and, more important, we're going to include their emotions in their decisions. We're going to help them to get clarity about their entire financial life, and the tools that they see will be the same.

So, like at Starbucks, where you order coffee a specific way, when you go from one of our offices to another, you know that you'll get it the same way at every office.


Some advisors hear "Starbucks experience" and think that somehow they're going to be forced to be a certain type of advisor.

What we create is created jointly with our advisors. We're creating a category that doesn't exist, and it's very hard for people to wrap their brains around it because up to now it's either been the pushed-down model of the full-service brokerage firm or the do-it-all-yourself model of the stand-alone advisor.

What we're saying is we can get the best of both sides: the size advantage of being big and, because of our equity structure, having our partner advisors tell us what we need to invest in to make things better.


Which markets are you focused on?

The Midwest has been an area where we really don't have enough offices, other than Chicago.

Then we're growing concentrically from local offices that we have. Dallas is a big area for us; we're expanding in Dallas. We're looking to expand in Atlanta. We're looking to expand in northeast Virginia. We think there is no reason we couldn't have 150 or 200 offices - we have 40 today - and we think we can do it over the next three to five years.


What kind of advisors are you looking to bring on?

It's very few breakaways from the wirehouses, because they don't know the complexities of running an office. Independents with $200 million or more, those are signature offices.

We find a lot of folks who are joining us are really client-centric above everything else. Second, they care a lot about growing, and they know that they need help. And third, we have people who are very humble. So we share a very consistent culture that we're here to serve our clients and to improve the industry.

Everybody who meets our employees - we're 350 strong now - says these are the most lovely, genuine, real people that I could ever want to be with. We don't ever want to compromise that.



Matthew Ackermann is online editor-in-chief of Financial Planning, On Wall Street and Bank Investment Consultant.

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