In a new episode of the Financial Planning Podcast, Pepper Anderson talks about going small to make a big difference.
Anderson,
She spent 23 years with J.P. Morgan and most recently worked as managing director and market manager for Connecticut and Westchester County, New York. Anderson also served as U.S. head of discretionary fixed income, head of J.P. Morgan Private Bank's Fiduciary Investor Group and investment team lead for high net worth and fiduciary.
But Anderson said over time, she began to feel the sheer size of her organization getting in the way of the work she wanted to do. With an entrepreneurial spirit and a passion for solving problems, the industry veteran longed for the flexibility and independence of a smaller organization and fewer walls between herself and end clients.
Today, Chilton serves 200 families in six geographical locations with dozens of advisors and is approaching $7 billion in assets under management. With the change in scope, Anderson said she is able to help Chilton's clients receive bespoke planning that actually gets them closer to their goals.
During her conversation with FP Podcast host and lead editorial producer Justin L. Mack, Anderson talked about all things practice management, including the benefits of breaking away and going independent; how her team is helping clients navigate market volatility; how wealth managers should approach working with the next generation; and what "value" truly means to prospects looking for a planner in 2022.
Listen to the new episode — as well as all future and past episodes — by subscribing to the FP Podcast on
Transcript:
Justin Mack: (
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host, Justin Mack, wealthtech reporter for Financial Planning. And it is my pleasure to introduce this week's guest, Pepper Anderson, president and chief executive officer of Chilton Trust. Pepper, thanks so much for chatting with us this week.
Pepper Anderson: (
Thank you for having me.
Justin Mack: (
Absolutely. Now, Pepper brings nearly three decades of experience in the financial services and wealth management industries to this week's pod. Prior to joining Chilton, she spent more than two of those decades with J.P. Morgan Private Bank, where she most recently served as managing director and market manager for Connecticut and Westchester County, New York. During her time there, Pepper developed a strong understanding of both technical investing and private client relationship management while holding a number of roles, including U.S. head of discretionary fixed income, head of the private bank's fiduciary investor group and investment team lead for high net worth and fiduciary. But today, we're going to be talking to Pepper about, well, a little bit of everything related to practice management, client management and the ever unpredictable environment that we all currently occupy. So Pepper, I wanted to jump right in because we've got a lot to cover. And with a guest with your experience, I want to cover as much as we can. But I wanted to start by talking about your path to Chilton. With a career full of accomplishments, and I imagine countless big steps, why was Chilton the right next step for you when you made it?
Pepper Anderson: (
I think as you referenced, I'd spent a long time in one organization. I didn't spend a single day bored or feeling stagnant, because even if you're with the same organization, that firm is likely changing constantly and the markets are changing constantly. So sometimes, it's all you can do to keep your legs under you. And I felt like I was constantly challenged, but what had happened along the way of that journey is that the firm got a lot bigger. And I had come to know myself. In a way I realized I was really ... I'm an entrepreneurial person. And I thrive in smaller environments where I can be more hands-on with every aspect of the business. And so when I joined J.P. Morgan, it was the 15,000 person Morgan Guarantee Trust Company. And I left the quarter million person J.P. Morgan Chase. Post many mergers and market events, etc. And different roles. And so I felt like I'd had a full suite of experiences and the opportunity to get back to that entrepreneurial business building kind of role just was something I couldn't pass up. And when I met the people, I realized that the first-class nature of them was, to a single person, unmatchable from what I'd seen in the industry. It felt like that was meant to be.
Justin Mack: (
Absolutely. And from what you describe, it sounds like also that desire and that drive to be more hands-on and have that kind of smaller space to work in, but being able to make a bigger, direct impact — I imagine with taking on a leadership role with something, I guess, a bit more focused, a bit more specialized. Was that appealing for you? And how much direction were you given when you joined Chilton to start, I guess, driving the direction and the focus what you guys were going to be all about?
Pepper Anderson: (
Well, I joined the firm at about the 10-year anniversary. So there was already a vision that was very much intact, and it was clear to me. It just worked out that I shared that vision. And so my job coming in was really to amplify that, but figure out how to continue developing it. So the areas where I had commonality with the firm were really in that hands-on kind of nature that you referenced. So, not to come in and be a change agent, which is often the reason for leadership to come in. That wasn't the ask, and I'd felt like at larger firms, more of my time, as happens to a lot of people, I think was being spent on internal exercises. Things that relate to managing really large, complicated businesses. And I wanted to spend the majority of my time with clients. So every single client has my cell phone number and they use it. Many of them. And so that's the kind of thing that I'd spent the early part of my career doing. And I don't know how I would be as a leader with too much time away from that daily contact. I think you get your best input from clients. What they really enjoy about you, where they're challenged, where they're nervous, and if you're lucky, the feedback that they give you directly.
Justin Mack: (
Yeah. It feels like almost when you describe it, like a back-to-the-essence kind of thing. And getting back to, like you said, just doing the work. And I relate to it quite a bit as a reporter. My favorite editors and the best editors and kind of editor I strive to be in my role now is one who's very much a reporter and loves to do the reporting. So, for leadership to have that desire, to work with clients and provide your cell phone, that kind of shows that same desire that, you know, what we got into this for is the thing that still pushes you forward — no matter how many roles you take or how much that changes. Speaking of change, it's a great opportunity before we talk about the current unpredictability. Talk about some of the unpredictability you faced shortly after joining Chilton. Correct me if I'm wrong, but you joined in summer 2019. We know what was coming the next year. Talk to me a little bit about, I guess, transitioning through that, but having the chance to lead an organization through what is still one of the most difficult times that many folks will remember in their lives through 2020.
Pepper Anderson: (
Yeah. I think so many of the important things in our lives ... we all wonder is this the right time? Is it too soon? Is it too late? This is one where I think I got the timing just right by luck and circumstance to be able to come into Chilton and really get to know everybody internally. Get to know clients. Understand the business, including the less glamorous part, which is the infrastructure and the guts of the place. And have a real understanding for where I could make a difference and where the sort of five-year plan might lead us. And then when we all sort of went home for quite a long time, I felt like I had a good playbook. But the first thing I worried about was, would I have to throw out the playbook and find a brand new one.
Pepper Anderson: (
And I was really impressed internally, and this may be just a virtue of the personalities here, but also the size of our business and the way that we think about investing in the same way. Just kind of stay focused on the horizon. And the changes you make are tweaks to your day, but you can't lose your long-term vision where you're trying to go. So I didn't have to change my entire plan. I just had to make adaptations that would survive COVID and the differences in the way we were communicating and maybe some of the sequencing. I spent maybe a little more time internally on things like infrastructure and platform buildout than I might have spent on being on the road continuously, for example,
Justin Mack: (
Transitioning over to working with clients through both that time and the current inflationary environment and market volatility, which we talk about and report about all the time. Talk to me a little about how Chilton Trust is helping clients through all of these different stages. What are the strengths there? And what is getting the best response from clients as they come with difficulties and successes and all the different things that, you know, advisors and planners and folks like yourself help them with?
Pepper Anderson: (
I think there's two things that are really hard for advisors. At least in my experience, what I've struggled with is, number one, staying informed and feeling like I have all of the information I need at my disposal to give great advice and support to clients. And there's just constant learning for all of us. And the second thing is having the bandwidth to actually dig in and spend as much time with each family as you need to. A lot of people's practices are quite large, and that can just be an exercise in organizational skills and triage. And it's a terrible feeling to be back on your heels. So I did appreciate the fact that we are highly staffed in terms of our ratio of advisors to clients. And not just the lead advisors, but across all areas — investments and all the specialty areas. And so I felt like we've been able to really focus on each family and understand their interpretation, because uncertainty and volatility are something that some people see as opportunity, and they're not flustered. Some people are terrified and they can't sleep at night. And a lot of people's plans just need to be rewritten a little bit in terms of the basic things like volatility, changing how you think about liquidity or tax planning, etc — some of your longer term goals. And it really has to be a personal conversation.
Justin Mack: (
Definitely. And, and I love that point you made about it having to be a personal conversation and the different kinds of folks who exist or react to market volatility or unpredictability. There is no blanket statement. I think sometimes we see people who are trying to provide advice, and sometimes just in a pursuit of, you know, those resources ... trying to learn more. But we see kind of these wide-sweeping generalizations about "retirees like this," and "millennials think like that." And, "boomers love this one crazy trick, click below!" All this stuff. But as you mentioned, it is very much about understanding what each individual needs, having a personal conversation and listening before dispatching a plan. That process is very, very hands on. Very granular. Do you enjoy that process of the listening and kind of removing those generalizations to provide, I guess, better service?
Pepper Anderson: (
Yeah. I think at heart, I grew up in the fixed income world. And at heart, I am a math geek. I just like to think of myself as a math geek with personality. So some of it to me, what I enjoy is the logic part. And you need to have all of the information. And information only comes to you in this business as a result of trust and comfort. So you have to build that listening skill and the ability for people to open up and give you that information so that then you can start trying to solve the puzzle with them of what it means for each family. So to me, that problem solving the personal nature of relationships and the longevity that that can create is rewarding from a mathy kind of sense. But it's also rewarding just as a human being to have that kind of impact on a family. So it's not work that I initially thought I would do after graduating college. But it's ... I feel very lucky to have stumbled on that blend of IQ and EQ,
Justin Mack: (
Definitely. And how much, or I guess how valuable is it, to rely on whatever your strength or your interest is and find those deeper personal connections? Reason I ask is because with so much movement in the industry and so much choice for advisors, that same choice lies in the hands of clients. Clients who are now getting and seeking more information than ever before we have all the stats that we often refer to. Over the past three years, requests for financial planning increased by more than 40%. The number of RIAs now — skyrocketing, I believe exceeding the 14,000 mark,
Pepper Anderson: (
Well, I think there's two pieces of that. One is the technical skills that might tell you the kind of client base that you will work best with. So for example, there's vocabulary that goes along with certain types of balance sheets. When people own, for example, privately held business or they're employed by a private equity firm — there is a way that wealth is created and held. That makes it really important if you're going ton do terrific work for a family — you need to understand those things. And then the other side is the soft part, which goes back to that listening. You just mentioned making sure that your personality fits for people. You know, I don't think any of us have gone through our lives and been liked by every single person we've come across or felt chemistry with them. And I think that's OK. You have to sort of understand the type of personality, and that's where I think the industry gets things a little bit wrong. As you just mentioned, it's not age and what generation you're a part of, necessarily. Sometimes it's just, do you have great conversations that makes someone comfortable sharing the details with you?
Justin Mack: (
All right. And we're going to hit the pause button right here and enjoy a quick word from our sponsors. But when we return, we'll have a lot more with Chilton Trust President and CEO Pepper Anderson — talking about all things practice management, client management and as tradition now on the FP Pod, a few good vibes. So stay locked to the Financial Planning Podcast. We'll be right back after this break.
And welcome back to the Financial Planning Podcast. I'm your host, Justin Mack. And this week, we are diving back into our conversation with Chilton Trust President and CEO pepper Anderson. Now Pepper, before the break, we talked a lot about the environment we're in and what's going to be required for advisors to continue to keep that close relationship with clients and continue to make the best out of everything we're handed. So I want to transition by talking a little bit about how the industry has changed both inside and out, and focusing more on the demographics of both clients and advisors. So starting with clients, we know that working with the younger generation, the next generation, is a big focus. People are concerned with and talking all the time about the wealth transfer. Just wanted to talk a little bit about how Chilton is accepting that challenge. How are you reaching out to those younger investors, new investors, that next generation and making things stick?
Pepper Anderson: (
I think we're lucky in the sense that we have a number of families we work with who already have multiple generations involved in their relationships with us. And I've taken that approach to the way we manage those relationships and applied it to the way we construct our teams around new clients as well. Because I think sometimes it's tempting to have one advisor lead an entire family's multiple generations, when, in reality, sometimes the patriarch and matriarch are going to connect with somebody that their children and grandchildren just don't. Or they feel like they come secondary because that's my parents' advisor. And so what we've tried to do is, as a way also of bringing up some of our own younger talent and really bringing them into relationships and giving them a leadership role in that, is have them play a lead role with that generation and build the connectivity.
Pepper Anderson: (
So there are times ... I got a text recently from a client and it was a picture of her with her stroller, walking through a park with one of our younger advisors and her child in a stroller. And they just decided that that was the way they were going to catch up. It wasn't sitting at a boardroom table or even a Zoom call. But they were going to do the practical thing and take their babies out for a spin because they were in the same city and talk about what's going on in the market. Things they worry about. And I thought that was so great that they found what worked for them. And I don't know that that relationship will be able to be replicated easily by anybody else at Chilton or elsewhere as a result.
Justin Mack: (
I love that example, because I think it shows something that a lot of folks have known, but the rules have changed. And were there any rules to begin with? Because like you said, that sounds (like it's) not the traditional, "come to the office, sit down, let's talk" and all of that. It's really an enjoyable way to catch up with anybody. It just happens to be your planner or your advisor. So I imagine it makes any conversation, even difficult ones, a heck of a lot more pleasant when you're doing something you already enjoy involving the family. That's gotta be really rewarding for both people involved in that interaction, I imagine.
Pepper Anderson: (
Yeah. I think we all should just delete the words "nobody" and "everybody" from our vocabulary, Because they don't exist in any kind of shape or fashion. And you know, one of the questions I always ask prospective new clients is, what do they most enjoy or appreciate in their current relationships? And what is one thing that they would change? And it's almost never what you would think. It's not usually about the brass tacks. Sometimes, it's the younger person saying nobody ever calls me. I get lots of information and lots of attention, but they don't call me and check in. And it's just the same way you might get an older person where they say everybody wants to have in-person. They say, "they call me all the time. And I really just want the brass tacks. Send me a report and a few bullet points." So, you know, just getting to know people individually. I think it oversimplifies the business, but it's a decent place to start
Justin Mack: (
And sticking with that conversation about that next generation. Let's talk advisors and young talent in the industry. How is Chilton working to reach out to those folks? And what are you seeing about, you know, the future of the industry as it relates to planners? We talk about trying to make sure the profession is more visible. And I often talk to advisors who say they got into this business accidentally. Didn't even know what a financial planner was until they were in college and realized that they had a skillset that was perfectly suited for doing exactly this. So at FP, we talk a lot about the groups who are doing outreach. Getting into high schools. Getting into colleges. Letting people know that planning is a career path that could be perfect for you. What kind of work are you guys doing in that same area?
Pepper Anderson: (
I don't think we have the scale and reach to be doing that much education, so I've thought about that a lot more as it relates to our own staff. Because we have a lot of people who would qualify as homegrown talent here. And it's obviously much easier and much more desirable to maintain your current staff than it is to go out and find brand new people. So we do a combination, of course, but for the people who are growing up here, so to speak, I think understanding what it is that they want to be doing. Because I've seen people leave firms before for jobs that nobody expected them to take, because nobody asked them what they wanted to learn or what they were trying to achieve in their lives. We get stuck on these linear kind of career paths and the world just doesn't seem to work that way anymore. They have endless options and lots of different potential ahead of them. And so we, I think as experienced people, need to really understand what they know and don't know and how to best use their talents. Because I think as you said, a lot of people get into this business accidentally. It's often because somebody pulled them in who saw the ability for them to be successful. So I think we just have to be out there finding it and looking at those skills
Justin Mack: (
Right on. Well said. So you hear that, advisors? If you see someone else who's got the goods, grab 'em, pull 'em in and and keep 'em in the industry to strengthen things and, at the end, help more clients. Which is really the goal. And sticking with that, I wanted to talk a little bit about investment opportunities — how that's changed with Chilton as everything changes. The client base changes, people grow, have new interests. What kind of new or fresher investment opportunities are you guys considering or are actively working in now?
Pepper Anderson: (
Well, I wouldn't say it's necessarily on the cutting edge of investments themselves. But what we've tried to do is a little bit of a look back into what added value a long time ago. I think there has been an industry-wide trend of having portfolios kind of prefabricated and you follow it. Or they're done in such an ad hoc way. And those are the two extremes. What we've tried to do is really take the best of both of those. So for example, I think there's been a trend of over diversification ever since the financial crisis, where everything seemed to correlate and risk management didn't go very well. So now, we all over diversify. But what it essentially means is that you have expensive beta oftentimes at the end of the day, and your risk management may or may not be any more effective.
Pepper Anderson: (
So we've spent a lot of time thinking through what's just enough diversification to mitigate some risk but allow each investment to make a difference. And it won't always be a positive one. You know, it might be a little bit bumpier. But it will definitely allow for each investment to be more transparent to you and to make a difference. And then we apply that kind of portfolio construction approach a bit more flexibly. So we have, for example, we talked about liquidity a little bit earlier. Private equity is something that is becoming more and more accessible to investors of all sizes of balance sheet. And so I think we need to lean in and understand where those opportunities really exist and build them. But also understand the fact that this is long-term money and it may not be a mindset or a practical solution for everybody. So we're trying to build a much more customized solution than I think many of our peer group.
Justin Mack: (
All right. Now we talked a lot throughout the episode about all of the "more" that kind of exists in the industry. People know more. There's more invested. There's more information available. More access to it through technology. More requests for planning due to an increased need because everything has gone crazy. There's a lot to consider. So it makes me wonder, and I would love to ask someone like yourself, what is the value proposition for an advisor in 2022? And is it really different than it was in the past? Has it changed or evolved at all, or does essentially the value advisors bring similar as far as what clients are looking for? It's just that everything around us has changed so much.
Pepper Anderson: (
Probably some of both. I think if you liken it to the medical world, with information comes the ability for you to be knowledgeable and build vocabulary and communicate better with experts in the space. So if you go to a doctor's appointment and you've already gone on WebMD and you've Googled everything, you might have a different way of articulating what's wrong with you or what you worry about. But you're still going to look at the doctor and say, "so tell me what your conclusion is from this." And so I think that the financial world has gotten to be similar. Information itself was the value prop for a long time. And now information and knowledge is out there for free consumption. (There's) almost too much of it if you ask a lot of people. And so once you have all of that, that's where I think there's ... getting to be more focus on having a financial advisor because there's so much information and it's tempting, I think, to go it yourself. But because you're constantly second guessing, just having an expert weigh in a little bit or as often or as deeply as you want has value.
Justin Mack: (
And as always, I promise the listeners of the FP Pod some good vibes to close things out. So I wanted to close by asking you about, again, the career we've kind of recapped and everything you're doing now. And ... you can hear it when you describe the excitement you get from being able to work in the current environment you're in. Being boutique, being focused and really being hands-on. So what's your favorite part of the job today? And how much does that align with what got you into the industry in the first place?
Pepper Anderson: (
Maybe because of the role that I'm in now, my favorite part of the day is when I have opportunities to sit with clients. And not just in the way that I always have as an advisor. But as a leader, there are people who have created their own success through all different businesses and avenues. And so they see me and they see Chilton in a different way than I do. And we're really lucky. We have a lot of clients who are invested in us and they care about us and I've ... sometimes have lunch with a client who will come out and pull a piece of paper out of her pocket every time with bullet points of feedback she wants to give me. And the first time she did that, she apologized and she said, "well, you asked." And so I came prepared with notes and I thought it was the best thing that I'd experienced because her perspective was so accurate and thoughtful and different from what I had been thinking. So now I've started really kind of cultivating my own kind of side advisory board, if you will, of clients. Because I really respect them and I learn so much from them. So that just intellectually has been very rewarding, but also helps me do my job.
Justin Mack: (
All right. Well that sounds like a win-win and I can't think of a better way to end it. So I want to thank you again, Pepper, for taking the time to join us and talk about pretty much everything. All things wealth management with us this week on the Financial Planning Podcast.
Pepper Anderson: (
Well, thanks so much for having me, Justin.
Justin Mack: (
Absolutely. And thank you to everyone for listening to the Financial Planning Podcast. This episode was produced by Arizent, with audio production by Kevin Parise. Special thanks again to our guest Pepper Anderson of Chilton Trust. Rate us, review us and subscribe to all of our content at www.financial-planning.com/subscribe. From Financial Planning, I'm Justin L. Mack, thanks for listening.