Becoming a Part of CLA Ownership
Following a successful live broadcast experience at the Private Industries Conference in Saint Paul, Minnesota, Denny turns the topic to investing in CLA and hosts a roundtable of guests to help give insight into this topic.
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Transcript
Narrator: Welcome to “Own the Promise,” a CLA podcast created to share what guides every decision we make and every relationship we cultivate.
[00:00:15]
Denny: Good morning, CLA, this is Denny coming to you again this month, actually, from St. Paul, Minnesota at the private industries conference. Having a wonderful time. I hope everyone enjoyed the livestream that we conducted. It seemed to go over very well for the firm. I’ve heard great responses. And thank you for everybody’s participation. Not only those that attended, but also those that attended via the livestream itself.
[00:00:41]
What I thought I would do, because we had the opportunity with people attending, is address something that we never really address too often within the firm in a public way. And that is really individuals throughout the firm that are interested in investing into the firm. In other words, becoming part of the ownership of CLA. We just went through that process and just completed it recently, and I just wanted to share some thoughts with you.
But before I do that, I want to introduce everyone that’s at the table with me today that I’d like to have give some input on this issue, the thought process that goes behind it, and just share some of their thoughts. So, before we get started, Jeff.
[00:01:26]
Jeff: I’m Jeff Servais, and I’m with the Minneapolis office in the private equity industry.
[00:01:32]
Heidi: I’m Heidi Hillman. I’m the CFO, and I reside in the Minneapolis office.
[00:01:38]
Nick: Hi, my name is Nick Nielsen. I’m in St. Cloud, Minnesota, and I’m part of the construction group.
[00:01:45]
Dan: Hello, my name’s Dan Thieret. I’m in the manufacturing industry in St. Louis.
[00:01:51]
Scott: Scott Engelbrecht. COO of CLA from St. Louis.
[00:01:55]
Denny: Scott, let’s start with you just because we all know this is a board of directors process. This is not a management issue that somehow management handles. And, traditionally, what has happened is the board has delegated this responsibility to a smaller group. Really, a subcommittee, in effect, of the board of directors. Could you tell us a little bit about how you led that and that process?
[00:02:21]
Scott: Absolutely. Thank you, Denny. Yeah, the board appointed a nine-member group, which I chair, the evaluation committee, and we really pretty much go through this process year-round. There’s really very little time we take off during the process.
But we go through and get connections and collaborations from people around the country– people that have raised their hand and said, “I have interest in investing in CLA; people that have raised their hand by virtue of their industry and service affiliations–and really spent a lot of time with MPOS, MPIS, CIOs, CSOs, and really finding out all about Nick Nielsen or finding out about Dan Thieret or others.
And really taking the process to a point of making sure, one, people are educated as to what ownership means in CLA and how that is different in a lot of ways than the principals in CLA and the differences around investment and return on investment and expectations. And we try to bring that all together each year in late summer, early fall to really come to a decision and a recommendation to the board of a group of people that we think deserve an invitation to ownership.
And that process is really culminated, again, in the collaboration I talked about earlier, but also, we wanna make sure we’re doing that fiscally responsible, and we really take our ten-year-vision model very much into play as well. So, thanks, Denny.
[00:03:49]
Denny: Thank you. And we all know, although sometimes we have to be reminded, that the ownership is not part of the career paths of CLA. It has nothing to do with career paths. But it doesn’t mean that it can’t be a goal for people. So, Dan, maybe let me start with you. How did you know that this was a goal that you wanted to achieve for yourself?
[00:04:12]
Dan: Well, it was a goal from just learning from the other owners in my office. I had Scott as an MPO in my office when I was growing up, and watching him and other owners in the office was something I wanted to achieve as I progressed in my career.
[00:04:25]
Denny: Thank you, Dan. And, Nick, the education process of understanding what ownership may mean or not mean, tell me how maybe you gathered some of that information and knowledge enough to know that this is something that made sense for you and your family.
[00:04:47]
Nick: Yeah, I think–throughout my career, I’ve always had good mentors, and a guy that retired a couple years ago, Tim Skelly, I spent a lot of time with and he kind of was the first guy who helped me understand kind of what it meant and everything. And I’ve talked others too, I guess, just, you know, throughout the years and kind of what it meant and everybody that was an owner was always open to helping me. I think it was maybe three years ago, Denny, when we were at the leadership development series.
You did a good job kind of to help preliminary understand some of the financial pieces of it too.
[00:05:17]
Denny: Thank you, Nick. Jeff, you’ve been around for a lot of years, and you’ve seen, probably, the progression of how transparent we might be with what ownership means and doesn’t mean. Just give us your perspective on how well the firm has or has not done in becoming maybe a little bit more transparent about that.
[00:05:39]
Jeff: I personally have seen a lot of increased transparency, and really understanding kind of where the process is, my role in it, and what I need to be doing in order to sort of move through that not only from a professional standpoint and what I need to do from a development, but also from a filling out the documents and going through the process and understanding when people are meeting and talking and what they’re talking about, which was a big change for me from just last year to this year and really understanding where I stand in the process.
[00:06:10]
Denny: And I just wanna reiterate again when I mentioned it’s not a career path in that we could have people that choose the manager/principal path can be awarded the ownership opportunity. People that select the director path and probably take on the additional responsibilities of a signing director. So that’s why it’s not a career path. It’s just simply a reward factor.
Heidi, you have a very interesting perspective because as operating as the CFO of the firm, in a lot of respects, you’re also the business CFO for the owners and the partners of the firm, dealing with all of the partnership-related issues. And now you’re in the position where you’re interested in being offered to invest into that same process. Just a very wide-open question. What are you observations since you’ve been in the CFO role and ownership within CLA?
Because it’s unique, and I’d just be interested in your almost a third-party perspective that you’ve been able to gain.
[00:07:12]
Heidi: Denny, you’re right, I do have a unique perspective, and I think I get to see all of the various aspects of the service lines, the different industries, and I think, you know, as an investor in any business, you wanna make sure you’re making a good investment decision and you wanna be well diversified, and I think that’s a unique opportunity that CLA affords the owners is to be highly diversified. It’s one business, but we have many different business lines.
We have wealth advisory, we have the outsourcing, we have the traditional accounting and tax, and I think it’s just a really good investment decision to be an owner in CLA, and I think it’s just a great opportunity to be a part of it.
[00:07:50]
Denny: You know, I wanna open this up to whoever might have a thought, but one of my beliefs over the years is that when we look at career advancements–so now our true career paths–it really is many times a 50/50 deal. It’s up to the individual to do the things they need to do to advance, but it’s very much up to the firm as well to create the opportunities–back to the why of CLA–to make sure that they have those career opportunities.
But when it comes to the ownership award, there I’ve always felt that it’s more upon the individual. The firm needs to produce the growth in order to have ownership opportunities, and the firm–that’s all of us–has to produce that growth, but then it comes down to the individual. For those that have aspirations in the CLA family to be where all of you are at, do you have advice?
Do you have personal advice that you could give them as to either mentally how to view this or maybe some very specific things to do along their career journey to be able to be sitting, perhaps, where you’re sitting? Any advice for our people?
[00:09:00]
Jeff: I think mine is, it starts before ownership. You have to think like an owner long before somebody gives you the award. You need to be committed. You need to be committed to whether it’s your group, the firm, all of that to move it forward and not have quite a “what is the firm”–this is, you know, pirating, you know–“what is the firm gonna do for me? But what can I do to move this firm forward and my group forward and my team forward?”
And the ownership award just sort of results from that. Rather than it being some milestone at the end, it’s just sort of a natural progression if you start early thinking “how can I help the firm move forward.”
[00:09:34]
Heidi: And just to add to that. I’d say, have passion and don’t be afraid to take a risk. If you stay kind of in the safe lane, you’re probably not gonna get there. So just, if you have a passion for something, be willing to raise your hand and say, “I’m ready to take this on.”
[00:09:51]
Nick: Yeah, I think also that just thinking like an owner and just remember that people are here to help us and help us understand what we really do need to do and sometimes I think earlier in our careers, we think we’re doing all the right things, but we need people to tell us that, you know, you should be–could be doing more.
[00:10:10]
Dan:
I guess I would finalize by saying, it’s more than just managing a book of business. I think that’s part of it, but you have to look at, you know, can you grow a book of business? Can you bring in new clients? People development’s a big part of it. There’s a lot of factors that go into besides just managing a book of business.
[00:10:27]
Denny: Scott, any advice for these four for the future?
[00:10:32]
Scott: First off, congratulations. Look forward to working with you all. And my advice would be stick with it. Keep spreading the faith and wealth, so to speak, because there are a lot of people behind you that wanna make the same investment. I’m sure of that.
[00:10:44]
Denny: And maybe I’ll finish off with just a final question as to–I think you’re all aware of this, but if you’re not, I hate to break the news to you, and that is that you did not hit the lottery. People are probably listening to this now and it’s a week old since the billion and a half or so was won, so that’s not you. But on the other hand, it is a very great long-term opportunity, and with that comes the fact that now after this reward, are you thinking about different things you could do for the firm?
Obviously, you’ve made it to this point, but are there thoughts and aspirations you would have because of this reward to say, “You know what? In my career for the rest of it with CLA, I plan on doing something more and different than what I’ve done to date.” Any thoughts on that?
[00:11:35]
Jeff: I guess, yes, but sort of more of the same. This does feel more of a validation of what I have done, and I don’t see that this is something that’s all of a sudden gonna turn my mindset into something completely different. It’s more of, we’ve gotten here because of the mentality and the passion I have for CLA, and continuing that for the rest of my career is the plan.
[00:12:01]
Denny: You know, I think the thing that–even everybody listening to this podcast, if you don’t understand it–while this is a great opportunity for people, it’s also an investment that they’re making, and an investment that comes with risk. An investment, really, that their making in all of us, into the CLA family, that this is going to be not only career rewarding, but it’s also gonna be financially rewarding for them just like any business owner would expect. So with all of this comes risk.
And I’ve joked with all of them individually that I’m very much am looking forward to getting their capital check into the firm, but that is just an example of the risk and the investment that they’re making. So I want to thank the four of you for making that investment, also for the rest of the owners that were rewarded this year. It’s a great firm. It’s a great investment. But it’s only because of the entire CLA family making it so.
[00:13:01]
So I hope everyone has a great rest of the promise season, and look forward to seeing and talking to all of you more in the future. Thank you.
Denny is the chief executive officer of CLA. As he goes about his duties related to the oversight of CLA’s direction, operations, expansion, and strategy, he is also an enthusiastic ambassador for the CLA Promise. He is fully committed to the firm’s position as a professional services firm that delivers integrated wealth advisory, outsourcing, and audit, tax, and consulting capabilities to help our clients succeed professionally and personally.
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