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Broker-Dealer CEO State of Company

CEO Presents State-of-the-Company Address at Annual Broker-Dealer Conference

During the opening session at the 2018 SCF Conference in Tucson, Arizona, President & CEO Randy Meadows shared with financial advisor attendees the state of the company and how SCF will focus its efforts and resources as the broker-dealer/RIA rolls into the new year.

2018 SCF Conference in Tucson, Arizona
Transcript of Opening Session by Randy Meadows
October 22, 2018

This morning, I want to update you on where the company is right now, what we’ve accomplished, and where we’re headed. As a firm, we have achieved eight consecutive years of double-digit growth — and this year is no exception. At the end of August, we were over twenty percent higher than the same time last year. If we continue at that pace, we will have taken a firm that was earning only three million dollars in revenue in 2010 — when we relaunched the firm — and will scare 30 million in revenue this year, if not surpass it.

That success is a result of your work, not mine, not SCF. This isn’t something I take credit for. I want each of you to realize what you have accomplished. I want you to know how much I appreciate your loyalty to this firm as you’ve achieved your success.

Firms that grow quickly in this industry oftentimes wind up in trouble financially because they start enjoying the fruit of their labor, pulling money out of the firm, and spending resources frivolously. That hasn’t happened here.

Our excess net capital reserve is more than twenty times what the regulators require of us. We continue to increase our net capital, putting money away every month. That’s an achievement not many firms are able to demonstrate.

Because of that growth, we’ve had an amazing year in the press. Until now, we’ve intentionally kept the firm low on the industry radar. I really don’t want the competition seeing what we do and focusing their efforts on us and our advisors.

But this year, Grant Cox convinced me to publish some specific numbers in an InvestmentNews broker-dealer survey. As a result, InvestmentNews identified us as the tenth-fastest growing independent broker-dealer in the industry in 2018. That’s your growth, that’s not SCF. That’s a reflection of your work and efforts.

We are here to provide you with the resources and tools that you need to continue to grow your practice. And with growth, we’ve had challenges. And we know what the challenges are — we hear from you every day about the challenges you experience in your daily interaction with us.

Over the last eight years, we’ve increased the number of home office staff by 360 percent. We’ve continued to invest in technology so we are able to handle scale. We’ve worked hard at that. We’ve expanded the size of our office space this year alone by almost forty percent. And we did that without relocating . . . Some office space opened up on the same floor of our building, and we were able to capture it and keep the same rent rate we’ve had for eleven years — without having the expenses and disruption associated with a home office relocation.

I share these things to demonstrate to you that we are managing this firm in a frugal way, but not in a cheap way. We’re applying the resources strategically so we can get the best bang for our buck.

One of the biggest challenges with the growth we’ve achieved in the last eight years is staying regulatorily clean. I’m proud of this. I’m extremely proud of it. It’s a reflection of many things. But it’s really a reflection of a very diligent compliance environment that doesn’t block you from submitting business, and has allowed us to stay regulatorily clean, with no FINRA sanctions to date.

Increasing assets under management from 180 million to over three billion dollars in the same period of time is phenomenal. It’s a reflection of focused business practices and our commitment to consistently deliver the diamond standard to you every day.

We’ve talked about this growth. We can reflect back on it and take great pride in it. I can stand up here and talk about what we’ve done and what we’ve accomplished. But it doesn’t really mean anything if we can’t continue to deliver that diamond standard service.

That growth means nothing. It’s already done. It’s already passed. So where do we go from here?

With success comes challenges. Mike Ditka once said, “Success is never permanent, and failure is never final.” Winston Churchill said, “Success always demands a greater effort.”

We’ve all heard the old adage that, if you want to succeed, you have to fail. I boil that down to this statement: Success typically comes as a result of failure.

I believe my role is to continue recasting the vision of SCF — to continue expanding on the dream that surfaced in 2011. Back then, we had this vision — this idea — about the firm we could build in the independent broker-dealer space. The type of firm that stays out of the way of our financial advisors but gives you what you need and keeps you compliant so you can build your practice your way.

Success has many enemies. Its number one enemy is complacency. That’s why, as a home office, we don’t take our success for granted. We know we haven’t arrived. Instead, we push hard every day. We keep striving forward.

Today, I want you to know that SCF is committed to fighting complacency. I realize it may not seem that way when you’re in the middle of a complex case and the paperwork isn’t right and we need you to change something. Or when you have a NIGO and you’re frustrated because you have to go back to the client a second or third time. This is one I want to address.

We’re going to fight complacency. We’re going to keep our guard up. We’re going to kick ourselves in the pants — for both your benefit and the firm’s — in a motivational way that gets our attention and stops complacency in its tracks.

We are committed to staying grounded and shift our focus to the fundamentals. You hear that time and time again. Teams make it to the World Series or Super Bowl and — when you study their path to that success — they don’t talk about fancy maneuvers. Instead, they say their sole focus the entire time was a focus on the fundamentals.

So, as a firm, we will focus on the fundamentals. We’ve got to seek out new ideas and welcome them. We have to challenge our perspective. We have to look to the future and not live in the past. We have to refine our systems and processes.

That’s why we will move forward with the theme of the Diamond Standard and build on that concept.

When you look at a diamond in the rough, you can hardly see it — it’s buried in the hard rock around it. Raw diamonds are called “Kimberlite” — they look like rock. But when you take that rock and give it to a diamond cutter, he is able to hone in on that diamond beneath and bring out the most beautiful, precious stone.

That’s why I’m excited to tell you that SCF is implementing a “Diamond Cutter Initiative” as we roll into next year with the number one priority of refocusing our firm on the fundamentals. It has to be a constant effort; we can never relax it.

One of the priorities will be a review of our SCF forms. Some of you are saying, “Thank goodness you’re going to do a forms a review.” I wish we could shift to “Keep it Simple and Smile” with our forms approach — but we can’t. Not in this environment. Not with the DOL still looming. Not with the regulatory environment becoming more stringent.

We have to keep our systems compliant. So, instead, we’ll follow a new acronym — KIASAP. “Keep It As Simple As Possible.” That’s the approach we’re committing to with our forms review.

We’ve actually already deployed a task force in the home office to review our forms. We’re three weeks into the project and have already identified several areas in our forms where we can make improvements. What I don’t want to do is publish an updated form, then a month later have to make another change — that’s something I’m going to personally keep an eye on. We have to keep our forms simple. We have to learn what’s working, identify what’s not working so we can fix it, and we have to stay committed to doing it right and making it better.

We’re also going to launch a regular schedule of round-table webinars. Because we’re spread throughout the nation, it’s not practical or realistic to pull you all together for an in-person event on a regular basis.

That’s why we are going to leverage technology to create a dynamic communication tool through a two-way video environment that allows SCF advisors to engage with us and with each other. We know how important it is for you, as advisors, to share your knowledge and experiences with each other, and provide feedback to us, so we all have what we need to work toward the next level in our business and financial practices.

I will wrap it up with this. As the CEO of this organization, it all comes back to my promise to you to maintain the mission of this firm: “To create an environment for our advisors which gives them the best possible opportunity to achieve success for themselves and their financial practices and their clients without compromising our core values.”

I believe long-term success is a result of consistently doing the right thing. At SCF, our continued success can be traced back to these core values.

Number one: Teamwork — Working as a team is essential to the shared success of all.

Number two: Respect — Treat others with respect, dignity, and common courtesy.

Number three: Accountability — Fully meet obligations to others in a timely manner.

Number four: Communication — Share complete information and be open to others’ ideas and criticisms.

Number five: Ethics and Integrity — Do the right thing, even when it’s unpopular or risky.

Number six: Direction and Purpose — Live with clear expectations and high standards.

That’s my promise to you. We’ve got your back. I’m committed to that. The firm is committed to that. And we’re committed to deliver the Diamond Standard to you each and every day as you continue to build your financial practice. Thank you.

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