Jack Sharry: Hello, everyone. Thank you for joining us on this edition of WealthTech on Deck. Each week, we explore the future of financial advice from a variety of angles. So, glad to have you on board. Today, we’re going to have a conversation around leadership. I know we talk about that around the edges, but we’re going to have a more of a robust conversation. I’ll explain why in a moment. As many of you probably have come to learn I’m a real student of leadership. I’ve had the good fortune of knowing and working for some really strong leaders and in modeling my own behavior, I continue to seek ways to develop my own leadership skills. Back in March, I attended the MMI summit in Miami. I was invited to work with a couple of emerging leaders, namely Danielle Learned and Nick Alfier, and they have gone through MMI’s mentorship program called Leadership Pathway. I had not met them prior to that, but it was great fun to work with them. And our charge was to moderate a conversation around leadership. And it was originally designed, I thought, to have younger folks, newer in the business, shall we say, help out. What was interesting is, as we got together while it was designed for people newer in the business, there were a couple of OGs, old guys, like me that sat in because they wanted to hear what the younger folks were saying, which is a testament to who they are and what they’re about, because they’re really trying to understand how to be better leaders themselves, even though they have senior level positions at their respective firms. So those two participants are friends of mine, Jay Link, who heads Merrill’s Advisory Program. He’s got trillions of dollars under his watch. And then the other is John Drahzal. John is the CEO of Horizon Investments, a very innovative, thoughtful, smart firm. Their contributions to our discussion made a big impression on me and everyone else in the room. So Jay joined us not too long ago on our podcast where we talked about this. Today we’re going to hear from John on his take on leadership and how to pass that on. So John, welcome. Good to have you on board. Thanks for joining us on WealthTech on Deck.

John Drahzal: Thanks, Jack. Happy to be here.

Jack Sharry: Yeah. So you’ve been around the industry, as we have chatted from time to time, as have I. Let’s start with providing our audience a little bit of your backstory, how you got started, and that’ll take us up to present day. We’ll get into that.

John Drahzal: Sure. So I feel like one of the luckiest people on the planet. You know, I grew up on Long Island. My dad was NYPD, you know, my parents didn’t go to college, so I was first generation to to go to college and was very fortunate to, upon graduation, to find a job in this industry. So I started my career as a portfolio manager and equity analyst, and spent the formative years really running money and moved over to the business building side. We hired a guy from Chase, who had built out what was then called the Vista Funds, and they had very successful mutual fund business. He came over, he said, we’re going to build that business here. So I was at the beginning of launching the Victory Funds, which went on to become Victory Capital Management, and really got much more involved in business building at that point, ran sales for the mutual fund business, moved on to institutional sales management. And I was fortunate that in those travels, I started calling on PaineWebber, which was then PaineWebber. Yeah. I started calling on a guy named Dave Odenath, who ran the managed account business. And we developed a good relationship, a good business relationship.

Jack Sharry: And, John, just to give our audience a perspective, what year would that have been? Because I knew Dave from way back when, when he was at probably PaineWebber at the time, and now UBS, but when was this that you guys got connected?

John Drahzal: Early 90s, so let’s say 94-95.

Jack Sharry: And for our audience that may not be tuned into the chronology of our industry, that was in the dawning, early days of managed money, that was way early, right?

John Drahzal: That’s right. I view those times like the tip of the spear of the industry and us. Lots of education, if you recall, Jack, still lots of transaction business being done, converting books of business to annuitizing books of business.

Jack Sharry: There’s a term. Forgot about that one.

John Drahzal: Yeah. And so, you know, the formative years were doing things like that. And then, you know, Dave moved to Pru, he hired me there, and I did lots of things there, you know, national accounts stuff. Ran retail distribution, so… funds and SMAs and so I’ve done a lot in the industry and moved to, you know, a couple of years ago, Dave and I hooked back up, and we started talking about the industry, and what we realized is that asset management in general hadn’t changed much. It was still, you know, I guess what I would what I would submit, is it’s an institutional approach to the retail client, and that didn’t make a lot of sense, right? So I always use my mom as an example. Does my mom care about the S&P 500? She really doesn’t. Right? What she cares about is how much money can I take out of my account and for how long. And so when we thought about the industry, we engaged with private equity, and we looked around the entire industry, and we tried to find a firm that thought the way we thought, and we were fortunate enough to come upon Horizon and Horizon has the best ideas, absolutely the best ideas. So set up in a goals based framework. So think about asset management being set up as accumulation. So from 21 to 50 something, you’re an accumulator. Then when you when you get to be in your 50s, you can see retirement. You’re much more concerned about absolute drawdown. So then you become a protection client. And then upon your retirement, then you become a spend client. And Horizon had all of these ideas, they were terrific, and so that’s how I arrived at Horizon. I’ve been working with Horizon since 2014 so it’s been, it’s been 10 years of the working on this project.

Jack Sharry: Talk a little bit about our friend in common, colleague of yours, Robbie Cannon, who started Horizon, kind of take the early story, we had Robbie on the show not too long ago. He’s a very innovative guy. Was, is, will always be so. But talk about how you and Dave found him. Sounds like it was a private equity situation. So talk about that. How you found Robbie, what you saw, you’ve described a little bit here, but then how did that become where you said, where you’re now involved, so tell us that story as well.

John Drahzal: Sure. So we found Robbie, just basically called him. So we had an outreach involved. And so I remember my first phone call with Robbie Cannon, because I did it in a car. I was driving from another management meeting, and I did my first phone call with Robbie. So it was really nothing more than that. We were able to, it was an outreach. We got to know him. I came down to Charlotte quite a bit. And, you know, I give Robbie all the credit in the world what he saw in the industry, and was able… so he saw the same thing we saw, but he actually was implementing that in his firm. And, you know, I think some of the things that Robbie saw were well ahead of their time. The use of technology, we have a really big technology spend here, big group. We offer planning software. We have an OCIO business that actually has a software component to it. So if you’re one of our clients, you have a dashboard with all of your information. So I give Robbie lots of credit for seeing that the traditional asset manager was really hobbled in, you know, the model had just become stale. And so over the course of time, I actually bought into Horizon as a partner. And then we were able to complete the private equity transaction. We did our first piece in the depth of COVID. We did a minority transaction, and then we did the control transaction in 2021, so about three years ago.

Jack Sharry: Gotcha. So talk a little bit about, so I know Robbie well. I’ve known him for a long time, just your classic entrepreneur idea guy, just crazy ideas that are like doable, and he gets them done, all that. So you, obviously, you and Odenath found him, identified him, bought into it, you know, became partners, and so on. And then Robbie decided to move on. So talk a little bit about that, because then you followed him up. I assume your next step was to become, take over as CEO. One, it’s tough to follow a guy like Robbie, who’s an idea minute, and then a lot of it has to do with leadership, which we’re gonna spend a little bit of time. So talk about how that transition took place. And then how did you sort of have people comfortable that Robbie was doing something else, and that you were the guy in charge, and you still needed to innovate and do cool things. So talk about that whole transition, if you would.

John Drahzal: Yeah, it was actually pretty easy. I had been here for years. And so I was a known quantity within the firm. I was a known quantity to the clients. And you know, the role that I was in was, I was president of the firm, so there was a natural elevation for me just to move to the CEO role. And you know, Robbie’s still involved. You know, Robbie’s on the board. And, you know, so I see and I speak to Robbie, you know, about the business. And so he’s been an active participant, but he is an idea a minute guy. And, you know, one of the things that we did when we went through the transition is we really thought about, like, the next phase for the company, right. And so there is a difference between a purely entrepreneurial endeavor and then the ability to scale that endeavor, right? What we found is that we did a couple of things at the beginning that I think, in retrospect, were absolutely the right things to do. First thing we did is we made every single employee shareholder, so we gave them all grants. There were option grants to every single employee, and we found that to be engaging. We found that employees really like the idea of being owners versus just, you know, a W2 person. And I think some of the things that we did were very helpful. So first thing is, look, we have corporate values here, community, unity, ingenuity, gratitude, and fun, and we mean them, right? So different than most places, so we live them. But the thing that we added to that about three years ago was we realized that values weren’t enough, right? Because people were like, what does that mean, right? So we instituted operating principles into the company, and the first one was transparency. And my view was, look, you’re all owners of this company. You deserve all the information on the firm. And so after each board meeting, we take the board material, we hold a town hall, and we provide every employee with insights into the company. Hey, what did flows look like? What do earnings look like? What do our strategic initiatives look like? And then we give them time to ask questions. So that was a very helpful change within the company. Second thing we did, and I gotta tell you, Jack, this isn’t for everyone, and I say it when I when I interview people, I say, I say, this next one’s not for everyone.

Jack Sharry: I got you.

John Drahzal: We instituted something called brutal but respectful honesty in the firm.

Jack Sharry: Tell me about that.

John Drahzal: It took a couple of years to take. People had to realize that, like, I mean it, I want you to tell me the truth. And what’s interesting is, people that come from a big corporate environment, they are loathe to tell you the truth.

Jack Sharry: Oh, totally. You get shot for that.

John Drahzal: Like, God forbid you tell the truth, you can get fired, right?

Jack Sharry: Yeah, exactly.

John Drahzal: What I realized. It’s funny. I was just watching, I don’t know, I was watching HBO. I’ve been watching the Chernobyl mini series again, and it was fascinating that I look at that structure of like, how they hid everything, how they couldn’t tell the truth, and they made this problem a big disaster when they could have mitigated it much earlier.

Jack Sharry: Interesting.

John Drahzal: And I’m like, I had corporate situations like that where you just couldn’t tell the truth. So the point here is, we love the truth. I love strength from employees. I love conviction in their opinions. I want to hear them, because guess what? You know, we all have blind spots, right? And every leadership team has blind spots, and so we instituted that. And then the third operating principle is, this is a meritocracy, right? It’s a very flat organization. And you know what I tell people is, good ideas come from everywhere. We have to listen to the entire organization. And that was, I wouldn’t say it’s a watershed moment in the company, because it took time, you know, you put these things out there. And, you know, one of my learnings from this was it can’t be a one and donef. If you’ve got a strong… if you want to build a culture, and I’ll talk about culture in a minute, because I think ultimately this manifested into culture. And I’ve got very specific views on culture, because leadership, I believe, is all about building a winning culture. And so, the point I’m trying to make is you have to repeat these. So every town hall people have to hear, oh, there goes John, talking about our values again, talking about our operating principles. And by the way, I do it with our clients too. Some of our clients tell me, because I’m good friends with a lot of our clients. And they’re like, you know, the first time you told me that, I thought I was really hokey. Now I realize you mean it.

Jack Sharry: Rare.

John Drahzal: I can see it in your company. So that was the big, you know, that’s been the big focus of the firm, right? Is building a winning culture. And I talk a lot about culture, right? And we measure these things, by the way, so I’ll get to some of the measurements because really what you’re trying to do… It’s not culture for the sake of culture, right? It’s culture to drive success. It’s building a winning culture where people will work together. And the way that we’ve arrived at that is a leadership style that I call coaching. You’re a coach, right? And so when you think back if you ever played team sports, or if you ever had a coach, you didn’t always love your coach, because sometimes your your coach might have given you some messages that you didn’t want to hear, but you knew that coach was coming from a place that they cared about you. They wanted to make you better, right? And so I had our whole team read this book called Trillion Dollar Coach. It’s basically eulogy to Bill Campbell. I would urge all listeners to read that book. Bill Campbell, the reason it’s called Trillion Dollar Coach is because he was the coach to all of the big tech companies and all of the issues that they had, and all the egos, and he created a trillion dollars in value. And he had a very specific approach to coaching, which was, you actually start with compassion. It starts with compassion, right? You have to care about someone to really give them positive feedback or negative feedback. If you’re trying to make them better, you have to start from a place of I care about you, and that’s why I’m providing this feedback, is I want to make you better. And what’s interesting is we have now steeped that throughout the company, and you know that is a self reinforcing mechanism. Once people understand it, they know that everyone’s just trying to make each other better, and we’re just trying to be on a winning team here. And my experience, Jack, is that people want to be on a winning team, and they want to be a part of something. So that’s really worked out well. The result of all that, right, so I hear a lot of my friends say we have a great culture, and I always ask them, like, what does that mean? What does that mean? Well, we all like each other, and I’m like, yeah, but your business isn’t doing very well. I’m glad you like each other, but, you know, your business is not performing the way it should perform. And so our big focus is winning through culture, right? Having that winning culture and then reinforcing that winning culture on an ongoing and consistent basis. And I mean, I could talk for hours about this, so I’ll stop, but…

Jack Sharry: I get it. I love it.

John Drahzal: But the most important thing, like to me, is, you and I have talked about this in the past. If you can instill that in your firm, the average age of a Horizon employee… You have any idea what it is?

Jack Sharry: I bet you it’s low.

John Drahzal: 38.

Jack Sharry: Yeah, yeah.

John Drahzal: I am, like the oldest guy in the firm.

Jack Sharry: We’ve talked about that too, right?

John Drahzal: And the great thing about it is, if you instill this culture of coaching and winning through culture and the employees develop in that culture, it is amazing to see what they can do, right? And so watching that development is amazing.

Jack Sharry: Let’s talk about that a little bit. So Danielle Learned, who was one of the people I did this moderating, coaching, whatever they called it, which was a lot of fun, especially with Danielle, who’s, as you well know, a pistol. She’s just super smart and driven and get it done and all that. She’s risen nicely in your organization, I observe.

John Drahzal: Yes. Sure. So I’m gonna give you two answers. First of all, there’s two ways to think about innovation. So we’re in a highly regulated business, right? And so these breakthrough innovations, you know, we’re not developing quantum computers here, right? But incremental innovation over time actually creates tremendous lift in a company. So we’re very focused on incremental innovation throughout the firm. Everyone’s empowered to do that within their organizations. The second thing I think most firms should at least consider, they’re probably doing it, but to consider it, is you need to take the time and have a structured process of innovation. So we actually have what we call the Skunk Works Committee, where we have a group of what I think are the most creative, brightest minds in the firm, and we get together, there’s no agenda. It is, what are your ideas? And let’s just blue sky it. Whatever you want to talk about when you come to Skunk Works, please talk about it. And what’s interesting is, I never know where that meeting is going to go, which I like, in a way. It’s like a little bit, it’s a very unstructured meeting, but the idea generation has been really powerful. So, you know, we’re in the process of launching active ETFs, right? So, you know, it’s something that our firm is very focused on right now. And what was fascinating to me is, I threw that out as a topic at Skunk Works, and the idea generation, the roadmap that started to emerge, I thought was remarkable, right? But it’s because we take the time and we invest in the innovation and the R&D process. And the other thing that I would add to that is innovation can’t come from a single person. It doesn’t work. You need to have a group of people thinking and speaking freely to each other and teasing out ideas and challenging each other, right? Because that’s when an idea can become actionable.

Jack Sharry: Yep. Couple more questions before we wind up. One, where do you see the future headed? Not only for Horizon, for yourself, where do we need to go as an industry? What do we need to do to make things better?

John Drahzal: Yeah, look, clearly, technology is key to everything that we’re doing within the industry, right? But everybody says that. I’ll tell you that I still believe in people in this industry. I’m going to give you an example. I use this example all the time, and you have to be a little bit older to remember this.

Jack Sharry: Okay.

John Drahzal: Do you remember when TurboTax was rolled out?

Jack Sharry: Sure, sure.

John Drahzal: It was 1984 and what the world thought was, oh my god, all the CPAs are going to go out of business, right? That didn’t happen, right? And so I remember looking at the industry when robos were going to take over, and I harken back to my experience with TurboTax, and what I realized was that that’s not the business we’re in. We’re in a people business. And Jack, I don’t think that changes. I really don’t.

Jack Sharry: Yep.

John Drahzal: I believe firmly that this will continue to be a people led business, and that humans need that, because these are really, really important decisions. We’re responsible for their dreams, and that requires the human element. I don’t know if that’s helpful, but that’s the way I see things.

Jack Sharry: Yeah, yeah, very helpful. And we’re kindred spirits in that way, in a variety of ways. So as we look to wrap up, any key takeaways you’d like to share with our audience?

John Drahzal: Yeah, my biggest takeaway is, is really just driving the winning culture. And the point that I would impress on everyone is it takes a lot of effort to build your culture, it takes constant… it’s like a garden. You need to care and feed it every day. But what ends up happening is, this is a joke, but not really, Jack, my goal here is to basically do nothing because the organization is running so well that I can, and I say that to people here. I’m like, yeah, well, my goal is to do nothing. I’ll let you guys do it all. And it’s amazing what happens, the flywheel effect that happens in the organization is truly remarkable.

Jack Sharry: That’s great. So one last question before we wrap up, always my favorite. What do you do outside of work that you are excited or passionate about, that people might find interesting or surprising?

John Drahzal: That’s gonna sound really odd, so my daughter is a show jumper, and she’s big in the equestrian world, and I’ve fallen in love with it.

Jack Sharry: Oh, wow.

John Drahzal: So, you know, we’ve owned many horses. I get very involved in it. I go to her shows, and I love being around the animals. It’s incredibly peaceful. There’s something about them. So that’s become, it’s, I would say it’s a shared passion between my daughter and I.

Jack Sharry: That’s wonderful, wonderful. So, John, this has been great. We’ve known each other over the years. The first time we really had a chance to chat was at that MMI meeting for any extended period. And hence why you’re here, because I really enjoyed that conversation. This one is even better. Look forward to many more to come. So thanks for spending some time on the pod with us, as the saying goes. For our audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we are doing here at WealthTech on Deck, we’re available wherever you get your podcasts. Please check us out on our dedicated website, wealthtechondeck.com. All of our episodes are there, along with blogs and curated content from many folks from around the industry, including the aforementioned Danielle Learned who is posting something on her race in Chicago, a marathon that’s coming up. So that website is much more than just what we talk about on the pod, but going further. John, thanks again. It’s been a real pleasure.

John Drahzal: Thank you, Jack. Always a pleasure.