We’re not sure the motivational guru has the right fit yet but aligning oversight with executive reputation risk is a good first step.
We’ve watched at least one high-profile RIA pull away from Tony Robbins after the latest wave of old scandals resurfaced.
The logic there is ruthless but clear. The firm tied its reputation to the celebrity figurehead but can’t supervise his outside activities.
They did all the due diligence they could. None of these sore spots in his career hit the screen.
Now that they have, he’s gone. But he’s got another financial enterprise that can’t disengage from his personal brand so easily.
As his disclosures routinely point out, Robbins owns 30% of retirement plan service group America’s Best 401(k). They can’t kick him out without buying him out.
And unless they’re willing to do that, the best they can hope for is that he’ll be a silent partner, keeping his personal brand deep in the operational background.
It’s not the best possible scenario for all stakeholders, but it’s a step up from the pure “influencer” relationships that in retrospect were too brittle to survive.
Live or die as the boss
From the outside, America’s Best 401(k) looks more like an employee benefits management platform than any kind of investment firm.
There’s no regulatory disclosure on the site and while the principals are passionate about better retirement outcomes, they don’t show up in an SEC search.
That’s okay. But it means that the background checks are looser and disciplinary codes don’t really apply. This isn’t exactly living up to the CFP Board’s standards.
When you’re an equity partner, the rules relax even more. As long as you’re simply investing cash and keeping your profile low, it doesn’t really matter who you’ve offended over the years.
Salesforce founder Marc Benioff technically plays a similar role in this particular firm. He doesn’t pontificate much about plan design or how great America’s Best 401(k) is.
From all appearances, this is just another of his relatively passive investments like Time magazine or dozens of high-tech startups.
His behavior and his personal brand are completely insulated from the firm and vice versa. If it wins, he looks good and makes money. If it loses, it’s table stakes. And if he were (unlikely) to suffer scandal, the firm will soldier on.
Robbins is a more complicated story. His son Josh, who has showed signs of wanting to follow in dad’s footsteps, is chief strategy officer.
His PR rep is on the executive team. And he’s personally never been shy about promoting the firm’s services, undoubtedly giving them millions of dollars of free publicity over the years.
On one hand, that’s the kind of outreach role that a lot of passive partners play very well. They get the word out and the venture prospers.
If their reputation isn’t perfect, it’s no problem. Just don’t put them in front of the public. Let the PR people and other brand ambassadors circulate the story.
Of course when you’ve got Tony Robbins around, you want to use him. He’ll probably rally from this and get back to the endless motivational circuit soon.
But you can’t let him go without cashing him out and driving a wedge between him and his son, the heir apparent.
I doubt he’d go without a big exit check. They might not be able to raise the cash on short notice.
Until they’re both willing and able, he’s there for the duration. His brand and their brand remain entwined.
Control what you can
Looking at the America’s Best 401(k) materials, I’m reminded of the age-old advice for squeezing incrementally better outcomes for retirees and other retail investors.
They’re at the market’s mercy. The random walk can theoretically crush them at any moment.
So their advocates focus on the aspects of the investment experience where decisions actually make a difference.
They hunt lower fees to reduce drag. If taxes and turnover mattered in a qualified account, they’d control those drag points too.
And that’s the deepest lesson here. Any time you delegate, you’re surrendering a little control over your success.
When industry protocols guarantee that you can supervise your people, the limits of that delegation are clear. When they screw up, you can gauge the effects and assign the blame.
You know exactly what to watch for and where to take responsibility.
With third-party relationships like the one Robbins had with that firm, it’s more nebulous. When it works, it works great. When it breaks down, there’s no procedure for allocating liability.
Robbins was technically a client at that firm who became an influencer and then an executive. That’s a lot of hats that don’t always wear well together.
And what it boiled down to was assigning someone you had zero control over at the beginning increasing amounts of power over your brand.
At the end, they literally weren’t controlling him. He was on the verge of overshadowing their reputation in the industry. So they cut him loose.
The boss, on the other hand, may or may not check every employee’s background with full rigor. Mistakes happen. Society changes and events that looked innocent once suddenly become a problem.
When you’re the boss, you’re in control. Nobody in the organization controls you. That’s Robbins at America’s Best 401(k) or at his day job, Robbins Research International, where the seminars happen.
It’s a lot of responsibility and a lot of freedom. Some people thrive in that position. Others have no choice beyond taking their destiny in their own hands.
In that scenario, you live and die on your own choices. You’re your own face, your own brand ambassador.
If you want to delegate, you do it on functions that don’t really depend on your individuality. Anyone with the expertise could do these tasks.
Only Robbins can sell Robbins. But anyone can sell investment advice.
Ironically what Robbins sells is self-empowerment. If he’s got you motivated to do it better, do it. You can do it yourself. Don’t let him (or anyone) get between you and your clients.
