HSG: At the end of 2006 you had over 175 firms. How does that change your roles and responsibilities as a holding company?
JMB: At the current pace of growth we have to make sure we manage it in the best possible way, create scalable solutions, and find the right balance. But the biggest difference is that we can't just keep our heads down and work quietly anymore. In the early days, we could focus on the M&A activity. Now, NFP has such a large presence in the life insurance space that we are obligated to get involved in the issues that will shape the future of the business. There are more public aspects of the business that need attention. We have to be engaged for our clients.
HSG: Any downside to the growth?
JMB: Well, there are the obvious challenges of dealing with all the different personalities and perspectives. And you want to make sure that big doesn't mean slow. We need to stay innovative, keep the great ideas and the creative juices flowing. Most of our firms haven't been part of a big company for a very long time, and in some cases never have been. We have to maintain the environment that made NFP the right fit for them in the first place, even as we grow. We have to make sure that they are part of a big company under the best possible circumstances, so to speak, and plan for the succession of our advisors' businesses when the time comes.
HSG: Your success seems to have spawned a group of people with plans to create a similar firm of advisory firms, but no one seems to have any real traction. Any thoughts on why?
JMB: We had unbelievable capital from the start and were able to make some big, smart acquisitions, so we got important scale early. Some of these circumstances can't be replicated. But I think the profile of our firms has a lot more to do with our success. We attract established professionals that want to be part of something bigger. They've got a long-term outlook and an incredible work ethic, which leads to our results. Another key factor for NFP is our management team. We have the best-of-the-best working across all our departments. I count myself lucky to have attracted such talent.
HSG: So this isn't a roll-up strategy? Or an exit alternative for a maturing advisory practice?
JMB: It's difficult to attract our caliber of talent when the short-term goal is to acquire a handful of firms and flip the company. There's a belief that amassing assets is enough, but assets walk. Clients buy professionals, and you need professionals that take pride in their discipline, pride in the name on the door and the business they built. Look, the idea of building the next NFP is incredibly attractive because of our success, but, having gone through it personally, successful execution is incredibly difficult.
HSG: Can you share some of your thoughts on future growth and how you'll be positioning NFP moving forward?
JMB: We still like the integration opportunity, so on the M&A side we're looking for benefits firms and wholesale-type organizations. We see those companies as growth engines for our other firms. And we'll continue to help our firms diversify by branching out into complementary areas that help them better meet their clients' needs.