Scott Reinhardt: I grew up in a small business family. My dad came out of commercial banking and, along with my mom, bought a small chain of lawn and garden retail stores in Upstate New York (Syracuse, and Rochester) called Agway Gardens. From a young age, I also wanted to be my own boss but I knew I wasn’t going to take over my parents’ small business, so I went to college. One class that had the most direct impact on what I do now was my 1993 corporate finance class, taught by Burton Malkiel, who wrote A Random Walk Down Wall Street. He introduced me to the ideas of free markets, market efficiency, and passive investing in index funds, and how hard it is for professionals and so-called experts to beat the index fund. After graduating from Princeton University, I was hired into a two-year investment banking analyst program. I viewed it as continuing education because I didn’t know what I wanted to do as a career, but I wanted it to be business or finance-related. From there I was hired into institutional equity sales, and that’s where I met Jonathan Farber. We were brokers to money managers—hedge fund managers, mutual fund managers, and the institutions that manage other people’s money. The longer I worked at brokerage firms, the more Professor Malkiel’s message resonated with me because I was watching firsthand what our clients were doing with the money and seeing firsthand how they were not meeting, let alone beating, the indexes that they were compared to.

As the years passed, I was getting tired of the rat race and just chasing a higher paycheck and a bonus. I learned a lot, but it kind of ran its course after nine or ten years.  And I still wanted to own my own business. I did think that the world needed more of these independent investment advisors who will implement the philosophy and the customer service in a way that I think is superior to the traditional model of someone just putting all their money in a few top-performing mutual funds or chasing stocks at a brokerage firm. So that’s kind of how the idea of an independent RIA came to fruition over a ten-year period from 1993 corporate finance class to when I got home to Syracuse, where I initially worked at a firm called RJR Associates. It was a registered investment advisory firm, and that’s where I learned some of the nuances of how you take what you believe in and use it to help people. I was there for almost two years and learned a lot about the operations and the day to day of an RIA.

But the owner of that firm wanted to keep 100% ownership and was trying to recruit his son back into the industry. So, once he made that clear, I left and that’s when I had an opportunity to start my own business like I always wanted to do. I had the philosophical underpinnings from college, and then my time on Wall Street proved to me that the philosophy is the correct one to implement on behalf of clients.

I partnered with Jonathan and we co-founded Passive Capital in December of 2006. So that’s basically what we’ve been doing for 17 years. And the core philosophy is the same. There are more passive low-cost investment products today than there were 17 years ago but what we do is still fundamentally the same. We want to be helpful to people, hustle, provide very good customer service, and good advice.

That is how I got to the point where I could work for myself—with a small team doing something that I genuinely believed could help people compared to the status quo in an industry that was moving from a salesmanship model to more of a profession where people are encouraged and rewarded for getting a CFA or CFP designation – planning and advice is what the marketplace demanded, not salesmanship. And if we’re doing our jobs properly, people will view us more like accountants or lawyers with fiduciary responsibility and less like we’re trying to sell them investment products because we have no financial incentive to sell investment products.

We only get paid an advisory fee—no commissions, so we don’t get paid for the products that we use in client portfolios. So, that trend is strong and I think it’ll continue just because it’s really a better, lower cost, more tax efficient, and a more disciplined way to invest. I think we have a lot of good years ahead of us, especially as we’re building out the team with some new younger folks.

Scott Reinhardt: I think it’s easier now that I’m working for myself and my kids are in high school. I find that it’s easier to maintain balance when I’m married with kids because it provides me with a broader perspective of my life. When I was in Boston working in brokerage firms, I enjoyed all of the client trips, entertainment, and late-night dinners — that worked for me in my twenties. However, I don’t think that was sustainable for me and my wife Katie and I wanted to have a family in Upstate NY.

I find it easier working at a small firm, doing something I believe in, and having family, friends, and teammates who I’m fortunate to be surrounded by every day. I think it’s pretty easy to maintain balance now compared to my younger days.

When we’re interviewing candidates, we talk to them about work-life balance, and in my industry, just living your life and interacting with family and friends, going out can naturally cross over into business relationships as well. So, I would say that being surrounded by great people and being my boss helps me a lot.

Scott Reinhardt: I think more and more people are appreciating how a little financial planning can go a long way while they’re on a long-term retirement plan. Because of this, more people appreciate and understand designations such as CFP, CFA & CRPC.

There is a trend toward becoming more professional within the financial planning industry. 15 years ago, firms might have identified solely as money management entities, focusing primarily on investment accounts. However, as time goes on, I think we are augmenting our advice with more planning and advisor services – this is driven by customers in a very competitive industry. As a result we’re hiring people with skills to help with financial planning and advice.

However, I don’t think we’ve explained these changes to the marketplace as well as we could even though the marketplace definitely values and seeks it. That being said, there is a big opportunity ahead of us and there is a lot of room for improvement, whether improving our web presence, or just how we explain ourselves in meetings or the types of planning, the types of services we offer to people. So I think with the financial planning side of it, that trend is strong and will continue.

As a business owner, I also focus on how we operate and grow profitability, using technology to automate processes and manage more assets with fewer people than we would have needed 15 years ago, which I find interesting. We are not hiring someone in-house to help us with marketing, for example. We’re not hiring someone in-house to handle our technology needs. We also have a technology consultant and a compliance consultant so we can spend as much time as possible on our core competency – advising clients and helping them achieve their goals.

We can even start using artificial intelligence (AI) to help with RFPs from institutional prospects; finding ways to get better operationally, using technology, is interesting and necessary so that we can continue to maintain an advisory fee structure that is well below industry average.

Scott Reinhardt: I believe our customer service and our hustle are what our clients appreciate the most. I still have clients thank me for calling them back on the same day.  So just little things like treating people well and treating them how you want to be treated.

But beyond that, I think our industry designations set us apart. So as more and more people seek someone with a CFP, CFA or a CRPC, it becomes a major distinguishing factor for us.

I also think our investment philosophy used to distinguish us and I think it still does with some clients and prospects. But the vast majority of our clients don’t want to talk about the investment products or about active or passive investing; clients want advice on how to achieve their goals and they want to work with professionals they trust. That’s one of the things Jonathan and I learned early on: the products are just a means to a greater end.

We started our careers at brokerage firms, so we were used to speaking in acronyms and talking in Wall Street language, and it took us a year or two to understand that the general public does not really care about the jargon. Initially we talked too much before we realized it’s more important to listen. The vast majority of our clients have a goal or an issue with which they want help and the specific products that are used to help accomplish their goal are secondary. They want to know if you can help them and if you’re trustworthy. I believe that our philosophy gives our clients the highest odds of enjoying a successful investment experience, so when a client asks us to do something with which we are not comfortable, we are clear and upfront about the fact that we may not be the best fit for them. I think our discipline, philosophy, and knowledge base as portrayed through the industry designations, and then just old fashioned customer service, is what distinguishes us.

Scott Reinhardt: I think the way I view the team in my professional life and personal life really stems from what I learned playing sports. I played lacrosse in high school and college and it was competitive and intense. But one of the many things I learned is that if you’re surrounded by good people, then good things tend to happen.

The corollary to that is we all sometimes surround ourselves with a bad person or two when we’re young, and that’s when bad things tend to happen. So, while playing lacrosse at West Genesee High School and Princeton University, I was surrounded by great people and the odds of success were much higher.

This is something I’ve tried to emulate professionally and personally. In my earlier professional days when I was younger, I was fortunate. I was surrounded by good people and those good people looked out for my own best interests and helped my career progress. And now the shoe is on the other foot. I try to help my younger teammates, or if speaking to someone who is trying to discern their career path, I always advise them to surround themselves with good people because then you’ll have a better experience. I was very fortunate growing up in a wonderful home with a mom and dad and three older sisters who looked out for me.  Now I have my own family with a wonderful wife and kids. All of these people – wife, kids, colleagues, friends, former lacrosse teammates – make me a better person and increase the odds of personal and professional happiness and success.

And it goes both ways. Great teams tend to have great individuals but I think it is more than that. I think with team success comes individual success and getting the most out of yourself. And so those are all things I learned in high school and college firsthand playing lacrosse and I keep in mind in my personal and professional life

Scott Reinhardt: We tell people upfront that we do not have a crystal ball. So, if you’re coming to us because you want certainty about when to go in or out of the stock market, or which stocks to buy or sell, then we are not the right fit.  No advisor has a crystal ball and we are happy to admit this. I think we definitely bring humility to the table to try to set clear expectations and this liberates us to focus on the things that are within our control and will increase the odds of enjoying a successful investment experience.  We focus on advice and planning that is centered on each particular client and the unique circumstances of their life.

Scott Reinhardt: I would say that even now, but definitely when I was younger, patience was not always on my list of strengths. Being patient and taking more time can lead to a better outcome.  There are times to hustle and there are times for patience.  With my younger self, I wish I could talk about patience and also hire more teammates sooner than we did. We were lean for a long time because we wanted to keep equity ownership inside the company and get the company off the ground to profitability. Hiring more teammates sooner could have helped us mature beyond the startup phase a little bit faster and allowed us to have a better work-life balance at a younger age.

Scott Reinhardt: I am most grateful for the people in my life—family, friends, teammates—and my health. Without the relationships, none of it matters. I enjoy earning money, just like other people, but money doesn’t drive me.

Scott Reinhardt: If I had to pick, I have three favorites, two of them from Henry David Thoreau. The first one would be: “A man is rich in proportion to the number of things which he can afford to let alone.” Being rich isn’t just having money in a bank account, but it’s also a relative sort of thing. If you want a yacht and a boat and multiple houses and so on, you’re not going to feel rich even with $5 million in your account because you always want more and more and more. Whereas if you don’t want a lot of material objects then maybe you can feel rich and comfortable having $200,000 in the bank. We all need basic levels of comfort with some material objects. It’s not like I don’t want food, clothing, shelter and things like that. But that’s also a message for when we are doing financial planning for a client or I’m talking to a young person about saving $1,000 a year and how $1,000 will double into $2,000, $4,000, $8,000, and $16,000, and so on by the time they retire. I tell them, the tradeoff is that they are not just spending $1,000 this year; what they are really doing is spending $16,000 – or more –  that their future selves could use. It’s important to balance the interests of your Current Self with your Future Self –  the more you can let alone, the easier it will be to feel rich and not get caught in the unending cycle of materialism and consumerism.

The second quote from Thoreau is “I would rather sit on a pumpkin and have it all to myself, than be crowded on a velvet cushion.” Of course, that’s a statement about being independent, being yourself, and being comfortable with being yourself, not just going with the herd.

Lastly, which is my high school yearbook quote, is from Yoda of Star Wars (1980). That wise Jedi Master said, “Do, or do not. There is no try.” Now, especially with kids, trying your best is really all you can do, so I think this quote resonates more with regards to professional customer service. If someone needs something, then just do it. That’s something I think of more professionally, but not something I talk to my kids about because I do think putting forth your best effort is really all you can do; whatever the results are, that’s what they are.

Scott Reinhardt: I think what drives me is my wife, kids, extended family, friends, colleagues, and clients – the great people who I know. As we all get older, people you love and care about pass away or you lose touch with them, and then that relationship is either permanently or temporarily gone. That’s why relationships matter now and always.

My favorite essay is by Marcus Tullius Cicero, and it’s called On Friendship—an approximately 30-page essay, which I’ve read many times. I read a couple of paragraphs from it when my dad passed away and then a couple of other paragraphs when one of my best friends got married. The essay is about the value of friendships and Cicero viewed them as the most valuable aspect of life; the golden nectar that helps sustain us – friendships and relationships. “Friendship improves happiness and abates misery, by the doubling of our joy and the dividing of our grief.”