By Steve Garmhausen

What kind of wealth management firm hosts client trips abroad, singles events, car shows, and more -- all for a mass-affluent client base? Randy Carver's $3 billion-asset firm does, and it's helped make Carver Financial Services, outside of Cleveland, one of Barron's Top 100 Financial Advisors. "We're a planning firm, but the big thing with our business is that we're trying to create a community and an experience," says Carver, whose firm serves 3,700 clients with eight advisors.

Speaking with Barron's Advisor, Carver explains how he beat a serious health issue diagnosed in his teens. He shares his keys to success, which include forgoing client prospecting and doing 30 full client planning meetings each week. And he opines that a "Wild West" rollout of policies under the new Trump administration will result in near-term volatility but long-term value.

Where are you from, and how did you get into the business? I was born in New York. We lived in Baltimore for two years, and we moved to Toronto when I was 11. I was supposed to be an Outward Bound instructor, one of the youngest ever. They had to do a chest X-ray for the precamp physical, and they found a big mass. They thought it was non-Hodgkin's lymphoma, and they gave me six months to live. Over the next three years, they took out one of my lungs, the top and bottom of the other one, my spleen, my thymus. I had two years of chemo, 10 weeks of radiation, all this crazy stuff. But I never died. Fifteen years later it was determined that I had a malignant thymoma. Anyway, since I was home a lot, I started reading The Wall Street Journal, and I got into investing.

I went to college in Oberlin College, in Ohio. To help pay my tuition, I started trading futures and options. Because I had no money, I was borrowing from my professors and using margin loans and basically guaranteeing them a 10% return. We were doing pretty well, so by my fourth year, one of the professors said, "Hey, you should teach a class in this." So I ended up teaching a credit class in Oberlin in options trading.

If you're teaching and you can get a guest lecturer, it saves a lot of prep. So I went to the Edward Jones office in Oberlin. I asked the guy to speak in my class, and he did. Then he said, "What are you gonna do when you graduate?" I had a business in Toronto painting and renovating houses. I'd built it from nothing and by then had 20 guys working for me. I said, "I'm gonna go back to Toronto and paint houses." He said, "You should get in the business."

Is it true that you personally asked Ted Jones, the son of Edward Jones's founder, for a job? I did three interviews with Edward Jones, and they came back and said, "We're not hiring you." It turns out one of the guys thought I was too young -- I was 20 at the time. One of the guys quit after the interview, which hopefully wasn't because of me, and one of the guys said yes but was overruled. I later found out that Ted Jones, the son of Edward Jones's founder, would be at an open house in Peoria, Ill. So I rented a car, drove to Illinois and sprung myself on Ted.

And you started at Edward Jones, in 1987. Fast-forward to today: What does your business look like? I worked for Edward Jones from 1986 to the end of 1990, when I set up my own gig and affiliated with what was Investment Management and Research and is now Raymond James.

We've got 27 team members. I was the sole owner up until last week, when I sold 20% of the business to five other members of the team. So we're now a partnership. We service 3,700 families and over 6,000 accounts with eight advisors, so it's more of a mass-affluent business. We're a planning firm, but the big thing with our business is that we're trying to create a community and an experience. For example, next Thursday we're doing a trip to Jamaica; we have 110 clients going. In May we're doing a singles event. Actually this Saturday I've got [economist] Jeremy Siegel coming for a breakfast. We do car shows, we do golf, we do all kinds of stuff. So we're trying to create experiences for clients versus just the planning. Clients pay 100% for the trips, and we generally pay for all other events.

I think a lot of firms don't spend the time to get to know their clients. They say they do, but they really don't know their concerns or their interests, what keeps them up at night or gets them up in the morning. We spend a lot of time with clients learning not just about their pets and their favorite beverages, but what's really important to them.

Where do you draw the line between being your clients' advisor and their friend? My clients have become my friends. If you go on YouTube, you can check out Carver Palooza, it's this huge party every year. There's a drone show. I made 2,000 Jell-O shots last year. We do a lot of fun stuff with clients, and I know there's always that debate of separating your personal life from your business life. For me, they're kind of one and the same. And when I talk to guys who are really successful, I see that as a common theme.

What have been some of the keys to your business success? I think one of the mistakes people in our business make is always focusing on prospecting. We focus on our clients and let them refer people. Our seminars and other events are not to bring in prospects; they're for our clients.

Everybody also claims to offer great service and personal attention, but very few people execute on that. Our office is open 8:00 to 7:00 Monday to Thursday, 8:00 to 5:00 on Friday, and 8:00 to noon on Saturday. But we take appointments whenever people want to meet -- early, late, holidays, weekends. We'll do pretty much anything for clients. Last year we opened 110 new relationships. We brought in north of $100 million, and it's all organic. We've never acquired a practice. I've never had an advisor come in with a book of business.

Having the right people on the team is just critical, and then just working our asses off. I still do. Typically, I'll do 30 client reviews a week -- 30 full planning meetings every week, and my guys do the same. On a busy day, we'll do 30 or 40 meetings in a day in the office. It's a volume practice, because our average client is only about a million dollars. It's not like we have these huge clients.

We've really focused on the next gen. Our retention rate is north of 90% when someone passes away -- we're not losing the beneficiaries, because we've made a real effort to do family meetings and focus on next gen. And we have three generations of advisors. I'm obviously in the older group, and I have a group in their 40s and a group in their 20s. That's by design, so we can be an enduring firm, and also because I think a lot of younger people like dealing with someone closer to their age. A 25-year-old doesn't want to deal with their parents' 60-year-old advisor.

What's your approach to compensation? We're team-based. The staff get salary plus a smaller bonus. Advisors get a salary but larger bonus based on the production of the entire business. Nobody has their own clients or is paid commissions per se. With a lot of offices it's you kill it, you eat it, and it creates an internal competition that's not good for servicing clients. So whether a client wants to work with me or one of my guys, we all benefit the same. And I think that's been a real key to success. Keep compensation simple, keep it based on the business, don't make it a competition.

As a volume-based business, what does your investment offering look like? It's primarily ETFs, mutual funds, and some bonds. We don't do individual stocks. We really don't do alts to speak of, although we're doing a little bit of private credit and direct indexing.

What are your business goals for the next few years? In the next four years we want to get to $5 billion of AUM. In the next year I want to bring in $200 million in assets organically. And we want to open 110 relationships a year, of which 10 are over five million bucks.

Does this plan include M&A? That's all organic. Yeah, we've never needed to acquire because we've grown so fast. Honestly we probably turn away more prospects than we take. We've been getting 30 to 50 referrals a month. A lot of people just aren't a good fit.

That sounds like a nice problem to have. It's a great problem. It's because our clients are advocates for us. Our net promoter score is 92.

What is currently your biggest business challenge? I think our No. 1 challenge is growing too fast and losing what makes us special. It's like Yogi Berra said: "Nobody goes to that restaurant anymore; it's too crowded." I don't want to lose the personal experience. So the challenge is how do we scale that and keep growing? The answer, I can tell you, is using technology, and AI specifically, to build some time into what we're doing.

What's your market outlook? Are you as optimistic as everyone else seems to be on the stock market for 2025? First of all, our planning is not based on a crystal ball. We tell people that we don't know what we don't know. And I think the question, "What do you think is going to happen?" is the wrong question for most retail investors. It's also the wrong question for most advisors. The question should be, "Is what's going to happen going to affect me, whether as an advisor or as a client?" If the answer is that it's not, because you have enough cash, or you have enough income, then it's more of an academic discussion. When we talk to clients, we talk about, "Does it really matter if you've got $5 million versus $4 million? Is your life going to change at all?" The answer is no.

That being said, markets don't like uncertainty, and the next six months are going to be really uncertain. While I think the policies for this administration are great -- less tax, more energy, less regulation -- the delivery is going to be like the Wild West. With that being said, lower taxes, less regulation, and more energy production are good for the broader equity markets in the longer term.

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January 24, 2025 09:06 ET (14:06 GMT)

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