[00:00:36] Andrew: Welcome, everybody, to another episode of Your Wealth & Beyond. I’m your host, Andrew Rafal. Today I am very excited to introduce all of you to Michael Messinger. Michael is the Founder and Principal Portfolio Manager for Los Angeles-based Redwood Investment Management. Today’s show is going to center around Michael taking a risk, leaving a corporate job that he was very successful climbing the corporate ladder, working for a large institutional financial firm, and the passion that he had in building and developing the mandate for Redwood. So, we’re going to talk through, as entrepreneurs, most of us have to take a risk of leaving something that’s comfortable. In Michael’s case, not only was it comfortable but it was very lucrative in income salary, benefits, etcetera. Over the last eight years, Michael has grown his company from just him and zero assets under management to a team that now manages over $1.2 billion and has partnered with financial advisors across the country. So, without further ado, my episode today with Michael Messinger.

[INTERVIEW]

[00:01:55] Andrew: Michael, welcome to the Your Wealth and Beyond Podcast. How are you doing today?

[00:01:59] Michael: I’m doing well, Andrew. Thank you for having me.

[00:02:01] Andrew: Michael, when we think back to how you started Redwood Investment Management, growing up back East, was being an entrepreneur something that you always had a dream of?

[00:02:11] Michael: It wasn’t. Candidly, it never occurred to me that one day I would be in an entrepreneurial position running a successful asset management firm and the entire experience has been extremely humbling so far. I was always very passionate about what I do and that led to a successful career that you mentioned previously to Redwood as an institutional asset management consultant working with financial advisors, trying to deliver solutions. And I always found that the ability to deliver something of value rather than pitching or selling was instrumental to that success and this passion, however, can cut both ways. So, while it drives the routine and the focus and determination and just the overall work ethic, that was great in terms of that secure job. It also left me pushing the limit to truly deliver value to my financial advisor clients and I mean real value. Because when you’re with a large multi-100-billion-dollar institutional money management firm, you’re somewhat restricted in the types of ideas that you can present and having come across so many different strategies and so many different investment implementations, it was very hard for me not to be able to recommend strategies that I saw in real time working but they just weren’t part of the firm that I was working for.

[00:03:38] Andrew: Okay. So, let’s take a step back for the listener that maybe doesn’t know our industry, the financial services industry. So, what was the role that you had where you were able to excel kind of climbing that corporate ladder and working day-to-day and in a sense grinding it out? What did that consist of? And as you learned, and you sat and hear from these advisors and then started focusing on how you could do it better, but first just kind of walk us through what that looks like and some of the perks that were there as you continue to climb and have the success within that company?

[00:04:11] Michael: Absolutely. So, the job that I had for an extended period of time with multiple large asset management firms was one in which that I was representing the asset management firm interacting as an intermediary between the asset management company and the financial advisors across the LA community that were implementing the different mutual funds, ETFs, separate accounts, hedge fund strategies of the large asset management firm that I was working for. So, on a day-to-day basis when you ask me in terms of what does it look like, I would see often 10 financial advisors before 10 AM. And in that position, I was able to come across so many different investment strategies that had nothing to do with the firm that I was representing. And the ability to learn from those advisors and to see all different types of strategies, all different types of business practices was extremely insightful to my career.

[00:05:19] Andrew: So, to simplify that to the listener who’s a business owner, who has investments, think in terms of you work with a financial advisor and they a lot of times were back in the day. Now, it’s more about planning but they in a sense were selling product and that product was the big institution and that was your job then, Michael, is to kind of present to these advisors why they should use X, Y, and Z funds, etcetera. And when you think about the success you had early on and this goes back to work ethic and I think being on the West Coast, California especially here in Arizona where I know you got your start, work ethic and having that dedication to your craft, no matter how smart or maybe you don’t have to be a genius to be successful but do you think that that work ethic itself of you seeing 10 advisors before 10 AM, do you think that help catapult you up to the success that you had early on as you got out of college?

[00:06:13] Michael: I think the early on success there was no doubt that that overall work ethic, that determination, that focus, the ability to maintain a very, very high focused routine was absolutely instrumental in that success early on. Absolutely.

[00:06:30] Andrew: And so, then you started gauging out your thinking in terms of, “Okay. We could do it better. I’ve kind of limited in what I can offer,” and you’re thinking in terms of now as Michael really running it sounds like a solo show. You didn’t really have any employees to work or have to deal with or manage. Is that correct as you were excelling in this role?

[00:06:50] Michael: In my previous role?

[00:06:52] Andrew: Correct. Previous role.

[00:06:53] Michael: Absolutely. I had one business partner. The two of us were covering the geographic Los Angeles County area working with all the financial advisors within that area but it was not a role in which I had employees that I had to manage up at all.

[00:07:11] Andrew: And then you started thinking about or seeing strategies or seeing ways in how you can do it better, but I guess the crux is and this is where a lot of the listeners out there may not be the business owner yet, but they’ve got the idea. They’ve got the vision and it is that kind of when you think about taking that leap of faith of leaving something that you are making, and I assume you are making good money and good benefits and you were going to continue on that path. Walk us through that emotional side of when you started to really envision, being able to step away, and create something with the notion that it may not work.

[00:07:51] Michael: So, I think from the emotional side, obviously different than the financial side in terms of that ability to leave a high paying successful career with benefits as you alluded to with a large company but what I think really and it’s probably great for the listeners who as you just said maybe have not started that entrepreneurial business but have an idea or have a thought that is more than just a thought, I take that back, but have an idea that they really are passionate about. And the emotional side was I actually saw strategies working both during the credit crisis, before, during, and after, and those strategies were not strategies that my firm was representing because my firm was too big to be able to. They were restricted in that capacity. There’s this saying at Redwood that’s called size is the enemy of alpha.

The larger the institutions, in any business, not just financial services, you tend to get a lot of herding mentality, less creativity, less ability to be nimble. So, when I actually saw these different strategies working in real-time, I became obsessed. I became obsessed with the information. I was pouring all of my free time into this quantitative research. I was trading my own personal money and because I was confident that I had something that I could deliver to different investors and advisors that I truly considered to be valuable. And you’re right, it was a risk. I knew from my experience that if I was able to share this with the same level of real passion that I could make it work.

[00:09:35] Andrew: And the timeline of when this was all happening was this around the great recession around the ’07, ’08, ’09 timeframe?

[00:09:43] Michael: So, I was first introduced to the strategy that I currently run today back in 2007, late 2007, and I actually saw it work in real-time throughout 2007, 2008 credit crisis and then on the recovery in 2009 so yes.

[00:10:03] Andrew: So, that timeline when you think in terms of while you were perfecting or analyzing and doing the research and the homework, it wasn’t just like, “I got this idea. I’m going to go do it,” but you also got to see as working with financial advisors where we did see on the equity side and I know a lot of the listeners can remember back even though it’s been a great expansion and bull run, but that tremendous loss of capital. And I think it might have been neat for you to see it because you’re dealing with every week dozens of financial advisors and how they were able – how emotionally it hit them and then you’re researching and studying this strategy that’s more about protecting that capital. Did that have any bearing on you feeling more and more that this could work? And it led you down that path?

[00:10:53] Michael: The confidence level of having a high level of efficacy in terms of the investment management strategy demonstrated high levels of efficacy throughout some of the most tumultuous times in the capital markets since arguably the Great Depression. To be able to actually witness that and see it live, trading with a real profit and loss with real client’s money, and actually see it work both in 2008 and 2009 with that ability, demonstrated ability to protect capital in a marketplace in 2008 where everything besides long-term treasuries, predominantly everything took huge, huge losses. There’s no doubt that that gave me tremendous confidence that this was something of real value.

[00:11:44] Andrew: And so, Redwood Founding, I always with the listener and building their business because I’m big in the marketing and branding, beyond the fact that you took this leap of faith and left a secure job and said, “I’m going to go do this,” you had to create a message around it. So, first off, where did the name Redwood come from? Obviously, looking back now I think it’s fantastic and it fits in exactly with what you guys are doing with discipline and the strength and the core but where did you come up with that name?

[00:12:13] Michael: So, to your point, yes. As it stands today, eight years later this strength of the Redwood trees, the longevity of the Redwood trees especially for the risk first mandate that we maintain at Redwood Investment Management, you would think that that had to do with something to do with that security with regards to the name and the Redwood trees up in Northern California but it’s actually the street name that I grew up on in New Jersey. I grew up on Redwood Drive in Monmouth County, New Jersey and that’s where the name came from.

[00:12:46] Andrew: You know, I’ve known you a long time and I didn’t know that. In my mind envisioned that you’re out in California, northern part, and you just maybe had an epiphany and it fit in with that. So, I don’t know if you’re aware but Bayntree is the street that I grew up on in Cleveland so look at that. It’s something that I think building a brand around something and the strength of both trees. There’s from that standpoint and having that historical, that testament to you growing up I think is cool. So, when you think about what Redwood is founded upon and you’ve touched on it a couple of times but that vision or that structure, that strategic value that Redwood brings, I mean, what is that if you break it down and someone says, “Michael, your company Redwood, what do you do?”

[00:13:30] Michael: What I think if you break it down to that level of simplicity, what we do is we take the emotions out of investing. There’s no doubt from retail investors to financial advisors too often not even that institutional money managers that their emotions get the best of them when they’re trading a profit and loss, when they have exposures to different bonds, different stocks, and there’s headline news or whatever it may be. So, for us, we believe that there’s the ability to remove the emotions out of the investing. You’re going to have a better outcome over time and this type of research we can test and research in advance of putting a dollar to work and that ability to have a disciplined focused process that removes the emotions and focuses on the math is something that I would describe as what we do at Redwood.

[00:14:31] Andrew: And so, this passion of protecting capital, using discipline, using rules, I mean, did that stem from personal experience for you? Did you lose money in the Great Recession or did you make some bad bets in ’01 and ’02? Where did that come from? As a younger person where younger people are more about risk and you built your whole company around taking that emotion out of it and trying to protect capital and doing it the right way, not betting or gambling, where did that come from?

[00:15:00] Michael: So, I’ve always been a believer even as a youngster playing sports that defense wins championships. So, in my early days of soccer both in club ball as well as in high school and even some club ball in college I played defense and so to me that always resonated in terms of success. What I always found is that my journey over my career I met a lot of different people, a lot of different personalities which means a lot of different stories and I always found that people like to talk about their ideas that worked. They’re at dinner with friends, they’re at the country club, and they’re all talking about the best stock over Thanksgiving with their family, but they never talk about what didn’t work even though those losses were real. So, the psychology of investing in this type of discretionary timing so to speak always interested me on how it actually played out. So, I would say that’s knowing the basic math of how much it requires an investor to make up from losses resonated tremendously with me at a very early start of my career.

[00:16:10] Andrew: And then you got to see it in real time was your trading it in ‘07, ‘08, ‘09 and that itself got again bringing back to that confidence level that this works. So, when was Redwood founded? What was the actual date that you started the business?

[00:16:25] Michael: So, it was actually this month in 2010, March of 2010 the firm started. We began live trading on June 7 of 2010.

[00:16:35] Andrew: And so, as the principal, as the founder, looking back to 2010, pretty much at that point it’s just you bootstrapping on trying to get the marketing, making sure the quantitative, the research, and then at that point you are the rainmaker as well trying to get the clients in so that Redwood could actually start generating some revenue?

[00:16:55] Michael: Yeah. In the beginning, I wore many hats as we still do today, many of our partners and employees wear many hats but, in the beginning, absolutely. It started off as an obsessive, compulsive pouring over the quantitative research to make sure that I knew that the investment management strategy had a tremendous opportunity for success both in bull and bear markets. From there, it was building a business from paying phone bills to ordering Bloomberg terminals to eventually after somewhat of a successful track record in a short period of time, launching mutual funds, launching ETFs, and going out there in marketing and doing all of that in the beginning, absolutely.

[00:17:42] Andrew: And did you have a confidante, somebody that you could rely on as you have, basically, everything is on you? What was that maybe stress reliever or somebody that could help guide you, a mentor, whether they were in our business or out of the business because I think a lot of business owners they face that beginning uphill battle with everything’s on them. They’ve risked everything. Do you have any advice on somebody who’s starting out that they don’t have the ability to bring on the employees yet, but they do need to have people that they can be a sounding board on?

[00:18:14] Michael: You know, that’s probably not one of my best strengths. Fortunately, for me, I did have a mentor who happens to be my partner today, Richard Duff. He was an old boss of mine with tremendous experience in the asset management business both at small and large companies and he was definitely helpful in setting the foundation of the direction of where we take the firm in terms of business growth. On the investment management side which I’m separating completely from the business growth, I felt that it was actually better to not have the noise from others. Most of what we do at Redwood is completely counterintuitive and against normal conventional financial planning, not financial planning, but bottom-up fundamental modern portfolio Siri types of investments and candidly, I think being in Los Angeles and not having those discussions with others was actually advantageous to the growth here.

[00:19:18] Andrew: And the one thing is as following your company and understanding the growth of your company that I thought was unique and especially in the financial services arena, the one thing that a lot of investment managers or asset managers – so listeners, there’s a difference between a financial advisor who’s helping to put together your plan and bringing the right investments and the asset manager. So, in this case just so everybody is a high-level, Redwood is the asset manager there. But what we’ve seen being in the financial services industry for over 15 years, the marketing side from the asset managers were just it’s always been pretty poor. Not being able to convey the message, not having anything sexy, and the one thing that I think you did very well from the get-go is that you realize, “I’ve got to market this thing.” I don’t think you did on your own, right? You said I’m going to put the capital in to build the marketing and to do it different to get my messaging out there. And so, when you think about creating that, putting that marketing hat on, I think in a lot of times the business owner is afraid to put capital back into the business.

So, I assume you entrusted a marketing firm as you started getting bigger and being in LA, a lot of different accessibility to them but was that something that you look at your success early on is that capitals started bringing in clients, started generating revenue, but you put a lot of that capital back into the business and one of that fundamentally is spending money in this case whether it be the systems, the processes or the marketing and that’s something that business owners have to look at. Taking that paycheck out and not putting it back in may look great short-term but long-term you’re not going to be as effective?

[00:20:59] Michael: No. There’s no doubt that you have to reinvest in the business where there’s capacity. Often mature businesses don’t necessarily have the capacity to continue to grow at certain levels so distributing though the profits is in the interest of all the shareholders in that type of mature business. But at the beginning days of Redwood, I knew that for us to be able to expand and work with financial advisors the way that I’ve been accustomed to throughout my previous career, there was a lot of capital that needed to be taking place. We needed to launch mutual funds. We needed to launch hedge funds. We needed to build infrastructure. We needed to sit here typing on my Bloomberg terminal and there are no discounts and there’s a reason why Mr. Michael Bloomberg is a very, very, very wealthy man. These types of things you have to take that capital and put it back in the business, build the foundation, make sure the plumbing is all right and set yourself up for success.

[00:21:58] Andrew: And then so, as you started growing and realizing I need more people, what did that look like? How did you start building out your business plan and in that incorporating and bringing in and hiring the right employees?

[00:22:09] Michael: I think similar to what we were talking about in the beginning in terms of passion, that’s what I look for. I’m not a big fan of looking at a resume or where people went to school or did this or that. To me, talent, passion’s going to drive talent. For those that are passionate about their job whether that be a legal and compliance role and they’re passionate or whether that be capital markets and investment management and being passionate. Whether being that salesperson who is extremely, extremely passionate about what they’re doing, to me that drives talent. That’s what I look for in terms of bringing on people to grow the business with me.

[00:22:46] Andrew: When you think about finding that right talent, I mean, beyond your successes and your passion and your work ethic, I mean, you start Redwood with zero dollars under management in 2010, correct, besides the money you’re managing?

[00:22:59] Michael: Zero dollars.

[00:23:00] Andrew: And now here we are. Zero dollars. So, you were eight years in and just so the listener has an idea and understanding of this growth trajectory that you went through, where are you guys right now? Where’s Redwood in the scope of the investment management through all the different channels that you do have? What are you, in a sense, what are you overseeing at this point?

[00:23:22] Michael: So, our business is 99% geared towards the financial advisor community so we work pretty much exclusively with financial advisors. As you said, we started off with zero assets. It was the firm just began and that was the start. Today we manage approximately $1.2 billion under management. We have seven mutual funds. We’re in the process of filing and starting our first ETF. We manage a hedge fund as well and that’s where we’re at today.

[00:23:56] Andrew: It’s just amazing growth there with the notion too and the industry works. As an asset manager, I think where a lot of asset managers fall into trouble is that they don’t build those relationships with the financial advisors and going that extra mile of doing the things that the financial advisor needs to be successful. So, it’s very easy then for that firm that financial advisor, the forward facing, working with the client to pivot and say, “Well, they’re not bringing me any value and their returns aren’t that good for the last six months so I’m jumping ship.” So, thinking about your experience from the get-go working with those financial advisors with the old firm, the big corporation, was that something that has led to the success from zero to over 1.2 billion because you understood who your market was which in this case was the financial advisor?

[00:24:49] Michael: A couple of things I’d say. The first is, number one, without my advisor partners, without firms like yourself, this business wouldn’t exist. So, that’s the first. As it pertains to I knew that the value that the larger firms could not provide, I witnessed it. I had tremendous experience with inside it. So, that passion, that knowledge, that ability to deliver a differentiated solution and then to work tirelessly to make sure that my team, myself, my colleagues, my partners are always there for our partners, I think that’s where the alignment in terms of both Redwood as well as the financial advisors led to the growth. And I would say it’s probably mutual growth when I look at the success of the investment advisors and our partners that we work with and it’s a truly sustainable win-win model in my opinion.

[00:25:51] Andrew: It wasn’t always the success, right? The one thing I’ve known knowing you for all these years is that you don’t give up. I think in any business especially looking at growing something and being able to build something that you know is going to be here for the long haul, you’re going to get kicked a lot. You’re going to have the no’s and what is it that you could as an advice to a business owner that maybe don’t have that mentality is how do you continue with that confidence when you’re getting maybe kicked a little bit in the beginning? How do you overcome that as it was just you running without a track record and without a company and without the history? What was that? Was that just maybe ignorance is bliss and you just…

[00:26:35] Michael: No. There are definitely days even now eight years later where, as you mentioned, you get kicked. I think that’s where it goes back down to the passion. I think specifically in my career where we’re quantitative investment management firm, the best part is that most of the research that we are doing can be tested. So, if I said to you as an example, what if you bought every third Sunday? What have you sold every time the market was down 5%? All of these ideas can be tested. So, I think that I’m in a different position maybe a little bit in a sense that I’m in a math-based environment but I would say is that in any business there is no growth trajectory that goes on a 45-degree angle whether that be professional athletes that are having slumps in baseball, whether that be financial professionals that are being told no all the time. If you have passion, if you have discipline, you keep that momentum going, you keep on telling your value-added story over time I think there’ll be tremendous success but with that said, there’s no doubt. You get kicked along the way. You have to remember nothing’s personal here. This is not personal. This is business. Folks that don’t subscribe to you doesn’t mean that they won’t in the future. So, there’s no reason to burn any bridges and stay focused, stay disciplined.

[00:28:04] Andrew: Well, I think it comes back to you can’t fake that passion and, in any business, if you’re going to be an entrepreneur, you’ve got to wake up each day and have the passion and know that you need to make this work. And I feel like when you started Redwood, you knew that this had to work and that’s something that a business owner if they don’t have that passion, it’s almost impossible to be successful. Not only that but then attracting the right talent. What’s extraordinary is your growth but then the fact that – how many employees does Redwood have right now?

[00:28:42] Michael: We have ten now.

[00:28:43] Andrew: So, the growth of being able to go from zero to where you are today. You didn’t do that alone, but you’ve done it lean and mean. So, how do you think Redwood’s attracted that talent and looking at from the top down that you are able to find the right people that were aligned with your vision that were going to be there to help grow this thing so that you could continue focusing on doing what you do best?

[00:29:07] Michael: I guess I would answer that question in a few ways. The first is that we hire very, very slowly meaning we want to make sure that both philosophically in terms of the investment management strategy as well as just personality, work ethic, passion, it takes us a long time to hire because we want to make sure that everybody is aligned with regards to the end goal. I think that question is probably better posed to my partners and I’d be interested to actually hear their response to that. I’m a big believer in people. You have to like the people you work with. There’s a lot of smart people out there but you have to enjoy working with your colleagues on a day-to-day basis.

I think when you ask me, what do I think attracted some of the people, there’s no doubt that my partners and those that work at Redwood see my passion. They see my excitement. Eight years later I’m coming to work every single morning and I’m excited. That is contagious, and I think that’s probably some of the reasons why folks decided to join Redwood and are still here. There are no egos here. From myself as the founder to other business partners, we all do small tasks, we all do large tasks. So, we take the approach to stay focused. It’s a non-egocentric environment culturally and together everybody can execute a beautiful vision.

[00:30:36] Andrew: Yeah. I think you said it perfectly there because, look, you built something and as the CEO, the founder, the principal, the thing about that I find very intriguing about you is you’ll still get in the weeds on a day-to-day basis. You’re not going to hide from anything. You’re going to be there for your partner whether it’s a financial advisor. The other areas that the capital markets they’re just unpredictable, right? So, every day we don’t know what we’re coming into, so we face it on all those different levels, but your success is that you’re not now Michael behind the scenes, we can’t get to him like the Wizard of Oz.

And so, business owners, as you become more and more successful, you’ve got to always focus on and don’t forget about what got you to that point and if you start losing that, you’re going to lose the vision of the company, you’re going to maybe lose the employees but I would assume, Michael, not being day-to-day in your office that the rest of your team they look to you as the leader and they say, “Michael’s doing that. You know what, I’m going to go the extra mile. I’m going to spend the extra time. I’m going to make that extra phone call,” and that just comes top down the leadership and running the company and the culture whether you’re smaller like Redwood or you’ve got 300 employees. You’ve got to focus on that.

[00:31:56] Michael: Yeah. I couldn’t agree more. As I said previously, without our advisor partners this business wouldn’t exist and for me, it’s working tirelessly to make sure that I’m available for my business partners. And so long as I’m here, that’s the approach I’m going to take it. I don’t think that you can take a different approach and have success from day one to let’s say year eight and all of a sudden have a different approach. Take that day one approach. Many of you may be familiar with Jeff Bezos and if I’m pronouncing Jeff’s last name properly from Amazon but he has an interesting shareholder letter that people can take a look at with respect to day one environment. Once you get to day two, I think you lose your edge so on a day-to-day basis that culture is the same as it was day one, focus on our clients and work as hard as we can to make sure that there’s the opportunity for that alignment of interest and mutual growth.

[00:32:58] Andrew: You know, with that being said in any business success or still growing, business leads to stress and I think you have a multitude of that in our industry because not only are we dealing with running a business but then we’re dealing with the unpredictability of the capital markets and money and dealing with losing people’s money is never fun but in the scope of regardless of that, what do you do? What does Michael do to relieve some stress? Because it’s something that I think all business owners are going to have their different outlets but I always like to get a feel for like what grounds you and what keeps you sane when you’re running not just the company but you got the family and all the things that go involve there like what are some of the things that keeps Michael from going off the rails?

[00:33:42] Michael: I would answer with one word, yoga. I’m a big yogi. I practice yoga five to six times a week and I found it to be extremely helpful in terms of that relief of that stress. I think often many people forget to exhale so I’ve learned over the last three years that it’s all about the breath and just breathing and focusing on that breath can be really, really helpful in terms of alleviating angst and stress along the way.

[00:34:11] Andrew: So, do you treat that then like a business meeting where it’s like it’s on your calendar and you’re going to, I mean, that is part of the job basically is looking and saying, “I need this because it’s going to make me better.”

[00:34:23] Michael: Not only is it part of the job but it’s also just part of my life, both family life as well. I’m a father of a five-and-a-half-year-old and an 18-month-old and I’m a big believer in it’s not about necessarily the quantity of the time but it’s the quality of the time, the ability to be present with my children, to be present with my wife, running a business where the capital markets are always open in some country and there is a lot of stress. There’s no doubt that this has become a part of my life. My family knows it. My kids know it and they’ve been very supportive, so I’ve been very fortunate.

[00:35:00] Andrew: Yeah. And I think if you think about there are 24 hours in the day and for somebody to say whether they’re running the company or they’re an employee that they can’t find time to be present with their family and/or exercise or do something that’s going to make them mentally focused and sharp, I think it’s just excuses there and for me, I’ve done that where it’s trying to find what triggers in me that keeps me grounded and happy whether it be hiking or just going for a jog? You’ve got to pencil it on your calendar like your team know and find that time because otherwise, you’re not going to be as effective for your clients, for your employees, for your family. So, I know we can work 100-hour weeks. You could probably work 110 hours, but you’ve got to make time for yourself because otherwise, you’re going to crash and burn.

[00:35:48] Michael: Yeah. And I think your productivity as well you’re clear, mind is clear, your ability to actually produce higher levels of work is definitely at a higher level when you are doing whatever type of exercise or whatever type of mindfulness exercises that one chooses to go through. But I have a partner in here and it’s choices when you mentioned excuses. These are choices. People have choices to make and some choose not to do whatever practices that whether it be health or fitness or hiking as you just mentioned. Others choose to do it and I encourage those that have not had the opportunity to really get into that routine to try it because while maybe that hour you think you don’t have that extra hour, I think in terms of the productivity and the output, you get a lot more than just an hour of normal productivity by doing those types of things.

[00:36:41] Andrew: Well said. Let’s go back to the growth, this exponential growth of Redwood. You guys being analytical and quantitative and research in regard to your strategies that you run, what do you think in regard to the thought process of where Redwood’s going to be a year from now, five years from now, ten years from now? Do you sit with your leadership team and do you guys envision out where you want to be like what’s in store for Redwood? What motivates Redwood? Where’s the next step whether it be a number-wise or just-growth-and-vision-wise? What do you find that’s been successful in enabling you guys to have this core focus and vision to get to the next level and the next level and the next level?

[00:37:25] Michael: I definitely don’t have a number in mind. We’ve spent the last two-and-a-half years as you are very, very well aware, Andrew, developing the product side on the asset management side, doing the research, implementing different strategies, doing a lot of testing and product development. So, now as we sit here in March of 2018 and we look to expand Redwood’s presence and we’re opening up our offices in Scottsdale, Arizona, I think that the ability to take a lot of the research and product development that we’ve done and hire sales and marketing talent to expand that story, to share that information, this research that we’ve done for close to 10 years now with other financial advisors, I think that’s going to be the next step and with hiring more sales analysts and teaching them the Redwood way, I think we’re going to be poised for a lot of success. But in terms of the number, I couldn’t give it to you. I just know that what we have here is a strong differentiator. I know that we all worked very hard and if we keep doing that, only success will come with that.

[00:38:39] Andrew: Yep. And you guys have been putting that capital back in and that’s something we touched on earlier, but I know there were some lean years there where you had hired the people that you knew were right. And looking at that and putting the capital instead of going into the owner’s pocket, it’s going right back in and it’s in the sense, I think, you look at it and I look at it here, it’s an investment on yourself. It’s an investment on the vision and the company but it’s hard. It’s hard to look at that and say, “Wow. I may not get paid this month,” even though you got this revenue coming in and that’s tough. I think that’s stuff for some business owners to think that way, to have more of the grand door vision. Any thoughts there of advice to a listener who’s maybe not putting the money into grow the company and some of the shortsightedness of that?

[00:39:34] Michael: Well, I can appreciate everybody has different financial commitments at the family levels in terms of business and operating and becoming successful as an entrepreneur. There’s no doubt you have to reinvest in your business. Don’t reinvest in the business if you do not passionately believe that that money that you’re investing is going to produce a strong return on that investment. You have to have that passion. You have to have that belief. So, for me, when I look at investing quite simply just expanding and opening up an office in Arizona and hiring sales managers from larger institutions which are not cheap, I truly believe that that investment will be tremendously rewarded financially. I could take that money as you just alluded to, I can distribute that to the different partners, and then go out and invest it somewhere else but I believe that reinvesting in Redwood the opportunity is far better and especially on a risk-adjusted basis where I’ve done the research, I can control a lot of it than going out and investing that money elsewhere.

[00:40:42] Andrew: Yeah. It’s definitely easier said than done and some do want to have just a lifestyle practice and that’s okay but if you want to grow it and you want to become the best in your field, you got to think of it longer-term and find the right partners and whether it be a bank and helping you to get to that point or I think you ought to be careful of taking on investors but looking at what is going to take you to that next level is the most important part of that and having the leadership team whether it’s internally or externally out. And I think, Michael, you said earlier it’s like I’m kind of that same way as I have mastermind groups and listen to other business owners but a lot of it I’ve taken and run with it and put it on my shoulders, and I know I got to get better at that too because I can learn. I can learn from others that are in our industry, outside of our industry. Part of why I do in this podcast is to learn what’s been successful for business owners, the trials, the tribulations because it isn’t always rosy, and we always, always, always can learn. And that’s something that that’s going to keep us focused on the endgame which I think is critical for the success.

So, you and I could probably have a whole show just talking about the strategies and the passion behind the risk-adjusted returns and the discipline but obviously, we’re not going to bore the rest of the listeners there. But that could be a whole another show. So, as we kind of wind down today, any other thoughts that you have if you’re giving advice to somebody who’s in the midst of trying to think of taking that leap of faith and leaving something that is predictable that they’ve got success and focusing on stepping outside of their comfort zone to start a company?

[00:42:29] Michael: It’s a very difficult thing that you’re referencing. Leaving a secure, it’s one thing when you’re young and it’s right away you’re taking an idea and you’re going straight into business and you don’t have necessarily, maybe family commitments or children, but your career is short-lived to all of us. We’re all going to, relatively speaking. And to me, you have to take a look at it and if you don’t believe in it then there’s no point of actually going and leaving that security. But if you believe in something, truly, truly, you wake up every morning, you’re thinking about it, you’re going to bed every night, you’re thinking about it, as much as I try to not think about it when I’m practicing yoga, I know that because of this, this is the right opportunity for me. I knew that nine, ten years ago. So, passion is going to create success, passion will create belief, and there are risks in everything but there are also risks in not doing and taking that leap of faith in terms of the entrepreneurial and you can look back and you can say, “You know what, I should’ve, I could’ve, I believed in it. Look, it did work.” Life is about taking risks, calculated risks, so believe in yourself, take those risks and be disciplined along the way.

[00:43:51] Andrew: Finley said there. I think I wish the same, as you said, where it’s always in our brain of the business itself and I guess that’s a double-edged sword where having that passion, it leads to the success but it’s also trying to disconnect and work towards it. It is working towards having that balance is so important but any entrepreneur who’s successful I think has to have the passion that you have and, yes, take the leap of faith. It’s easier said than done especially when you don’t have as much responsibility as you do maybe in your mid-40s but sometimes I wish that I could turn it off and I guess you and I need to continue working towards that common goal. I don’t know. I’m thinking meditation may be a good step in that direction. Have you gone down that path that all?

[00:44:38] Michael: I do a little bit. I wish I did a bit more but there’s no doubt that there have been some technological advancements with certain different apps for a guided meditation. So, I’ve had some success there and every time I do it, I always say I wish I did more, so this is a good reminder so thank you. I’m going to write that down right now and remind myself to do more of that.

[00:45:00] Andrew: Beautiful. Well, hey, listen, this has been fantastic. I think we opened the eyes of the focus. The core feed today was find your passion, think in terms of building the business the right way, and not just as many entrepreneurs there’s such high-level visions but, Michael, you had the vision but you also had the work ethic but then you also put in the time to grow the company the way you did by really focusing on the nuts and bolts of the business, in your sense, your strategies but then understanding how we’re going to get from point A to point B. So, fantastic stuff today. We really appreciate you being on the show. I know how busy you are, and I hope the listeners got as much out of it as I did and, Michael and Redwood, continued success with everything you guys are doing.

[00:45:54] Michael: Thank you very much for having me. Thank you for the continued partnership. Hopefully, the listeners took some things from what I said today. It’s difficult for myself to even as I mentioned it’s a humbling experience to even take a step back and see the success that we’ve had knowing that eight, nine years ago I was in a corporate environment, a very successful one. So, today was very helpful for me so I appreciate you inviting me on today.

[00:46:22] Andrew: Yeah. Definitely. And I think we all need to take a step back and you guys specifically and say, “Look, what we’ve done. Look, where we’ve come,” and maybe it’s the old adage, stop and smell the roses, but I think of anybody should be doing that, it’s you because you guys have come a long way. So, continued success. Awesome stuff.

[00:46:42] Michael: Thank you very much.

[00:46:43] Andrew: All right. Tune in later this month for another episode of your Wealth & Beyond Podcast. Thanks, everybody.

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Thank you for joining me for today’s episode of Your Wealth & Beyond. To get access to all the resources mentioned during today’s podcast, please visit Bayntree.com/Podcast, and be sure to tune in later this month for another episode of Your Wealth & Beyond.

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Investment advice is offered through Bayntree Wealth Advisors, LLC, a registered investment advisor. Insurance and annuity products are offered separately through Bayntree Planning Group, LLC. Bayntree is not permitted to offer and no statement made during the show shall constitute legal or tax advice. You should talk to a qualified professional before making any decisions about your personal situation.