Kyle McDonald, Building Financial Legacies

(08:10): returned to our American stories. Up next, Madison brings us the story of, and from, the man who founded Argent Financial Group, and who’s been helping people protect, manage, and grow their wealth for over thirty years. Kyle is a product of a small town in the South, and he shares his remarkable life’s journey. Here’s Kyle. My first nine

(08:35): or ten years of life was in Stonewall, Louisiana, which at the time was basically a very rural, dairy farm-centered community. I think there were twenty-six of my first grade class, and seventeen of us lived on a dairy farm. Very modest upbringing. Dad was my principal for eight of my twelve years. That was interesting. I would

(08:58): get in trouble at school, and he would take care of it at school, and then my mother would take care of it at home, so I kind of got a double dose. My dad was patient. When you shepherd a high school of five hundred or so through the segregation, it takes a lot of patience, a lot of understanding

(09:20): of different types of people and different walks of life, and, you know, that was something that I really admired. There were a few events growing up that gave me a sense of fairness in the sixties. You know, those were mostly related to the segregation issues, and kind of gave me a good foundation and the respect I have

(09:40): for my parents as a result of that. So they were both involved in education. So education was very important in our family and was their way out of very very very modest backgrounds, and they instilled that in us. It was certainly not idyllic, but very safe, protected, nurtured.

(10:03): I wouldn’t trade it. So we moved into Mansfield, which was a little bit larger community, and I was in high school. We had a business teacher that was really good. She had been at it a while, and she kind of hand-selected a group of us in our class when we were freshmen to be her, as she

(10:24): called it, “nucleus” of the Future Business Leaders of America Club FBLA. And so that really set me on a business course. I would say, as a freshman, nobody in my family was what I would call really business people. For the most part, they were educators or farmers. So I would say, you know, she set that course. So

(10:45): I went to Louisiana Tech to major in accounting and finance. Had the idea that I wanted to go to law school, but I didn’t really have a big interest in practicing law, but I wanted that background. When I was in college, I worked for a bank in the summers and during school breaks back in my hometown, and that really got me interested in the banking world. I finished at Louisiana

(11:09): Tech. Could go to LSU Law School do mainly banking law type work. I worked for the Bankers Association during law school, and then I got a job with the law firm at Baton Rouge to do bank work. But this was in nineteen eighty-four. Oil hit nine dollars Barrel, and the Louisiana economy basically collapsed, and when I

(11:33): was supposed to do bank merger work, I really was handed the job of doing commercial own workouts. It was a pretty difficult period because everybody was struggling financially, and there really wasn’t much when in that, and the deals that we were working on really the only people that were getting paid for the lawyers, and that didn’t feel right.

(11:56): And I guess I also had a little bit of an issue. I was making more money the first year out of law school. Then my dad made as principal, and it’s like I couldn’t wrap my head around the justice, I guess, in that. So I was at a bottle study retreat with a group of men that I had been meeting with in Baton Rouge right after law school,

(12:21): and it really was a variety of guys, from probably in their fifties, to, I mean, have been the youngest one around twenty-four. So, at the end of the Saturday meeting, they said, “So, what are you going to be doing at sixty-five?” which was at that time a long time away from me; not so far away now.

(12:42): But my answer was, “I’ll be retiring from a bank in Roston,” just kind of blurted it out. So I get home that evening, and I tell my wife Cystal. I said, “Okay, here’s the question. What was my answer?” And she said, “About a bank in Rustin.” So I said, “Yelp,”

(13:03): that was my answer. That was Saturday night, January of nineteen eighty-five. Sunday afternoon. The next afternoon, the banker from Ruston called me and asked me if I would come to Rustin and work for them. We had not spoken in probably fourteen months. So I have a lot of struggles, but knowing that I’m doing what I’m supposed

(13:26): to be doing is on one of them. Kyle worked with the bank for a few years, where he became familiar with the trust department. Trusts are ways to protect and hopefully grow wealth to serve families and the causes they believe in for many lifetimes. By nineteen ninety, Kyle and a few colleagues spun out this trust department to

(13:49): serve more clients. This is the company that would grow into what we know now as Argent. That was really the first big move to full independence. We were on our own. There was a lot involved, but it was really the idea that you could form something and be independent and kind of make a way on your own.

(14:10): That was the impetus for that. Argent is a full-service vaduciary wealth management firm. Fiduciaries hold a very unique position. They can charge clear fees for their services, but they must always act for the benefit of their client. Fairly recently, we were presented with an opportunity to make an investment, and the people that presented it to us kind

(14:33): of had a view of how we operated, the one exactly in line, and had they chosen another path, they would have hired basically a brokerage firm to place this investment, and the brokerage firm would have been paid a very handsome fee for doing that. That’s really not what we do.

(14:55): We would look at an investment opportunity to determine if it our clients’ needs, and as a part of the fee that our clients pay us, we would analyze that and determine if that was a good fit for them. And this situation, we actually wound up making the investment on behalf of our client, but we forewent the fee

(15:18): that was offered to us because that would have created a conflict of interest. Had we been paid to make an investment on behalf of our clients by a third party, that’s a violation of our fiduciary responsibility. We’re only going to put clients in an investment that we think makes sense for them and that fits what their

(15:39): needs are, and we can’t be compensated by a third party for doing that. So we left money on the table, and we think it’s going to be a really good investment for our clients. But it was kind of an opportunity. We could have gotten a little richer, a little quicker, but that would have violated our responsibilities to our client. We provide services. We don’t package products or anything.

(16:03): So all we have to sell, I guess, is our service, and really to serve somebody, you have to humble yourself. You have to take a second position, and as a fiduciary in the wealth management business, we’re always working for our client’s best interest. At the same time, we’ve got to have confidence in our competent theme and in our capabilities.

(16:27): And so somebody that’s capable and confident actually is a great description of a fiduciary, but also willing to take a step back and be got in second chair to serve. And so today, we’ve got responsibility for well over thirty-six billion in client assets, about three hundred or so

(16:49): employees and thirty markets in twelve primarily Southern States. And you’re listening to Kyle McDonald tell his family’s story, his ascent from a small town in the South, Stonewall, to managing billions and billions of dollars worth of people’s wealth.

(17:11): And this is the story that happens in America every day, this kind of upward mobility, and also the kind of integrity it takes for business owners to prosper. Cheating and lying may get you somewhere short-term, but integrity and serving the customer—this is the heart of free enterprise and protecting people’s wealth, my goodness, their treasure, their family,

(17:31): their businesses, their farms. What an obligation. And when we come back, more of Kyle McDonald’s story, Argent Financial Group’s story, and so much more here on our American story. And

(18:08): we continue with our American stories, and with Kyla McDonald, the CEO of Argent Financial Group. We’d heard him talk a bit about integrity and about putting the customer first, and so much of that probably just came straight from his dad and straight from his God. I mean, imagine

(18:29): a Bible study gets him to think about what he’s going to do with the rest of his life. And that’s what Bible studies do. Anybody who’s in a small group knows that in this great country. Let’s return to Kyle and more of his story. We started out, and still at our core, or a trustee. I use a

(18:52): flower metaphor. At the core of what we do as service a for these Sherry Premier as a trustee. But there are a lot of components that fit into that service, whether it’s administering trusts, managing the assets of different types and kinds, or it’s investment management and other types of management. Is accounting for that? So there’s a lot of components

(19:14): the different components of that service. But we build the full team and kind of the full flower, if you will, by having subject matter and business line component experts that bring the whole picture in the being. There’s probably not enough tone to tell all the challenges starting a business

(19:34): from scratch, at least in our world, and the wealth management world is not very linear. You do a lot of work to get clients to trust you literally and figuratively with their financial well-being, and then often it takes some kind of an event to actually create the opportunity to serve them, and so you can’t run a

(19:58): seal or anything else. And so there were financial struggles. I mean, there were very leading times, certainly in the early nineties, when we were getting started. In two thousand and eight, there was kind of a worldwide global meltdown of the financial markets. A lot of value was lost. Most financial services firms, which Argent would fit in that category,

(20:23): had horrific years. There were a number of firms on Wall Street, big, long-term firms that failed. No one was immune to it. Everything went down thirty, forty percent. But during that timeframe, there was natural gas discovery, I guess you’d say, in northwest Louisiana called the Haynesville’s Shell.

(20:45): There’s a lot of shell expiration that’s going on in Orlan gas. It was a big find. We had formed a mineral management company where we were helping clients who owned mineral interests before this discovery, and so in the midst of a meltdown of the financial markets, there was all of this activity of people. They’re leasing their mental

(21:08): rights to exploration companies, and they were paying really big dollars to lease that and then paying out royalties when they drilled them or it’s successful and drilling the well. So we collected a lot of lease bonuses for our clients, and then got paid a fee for helping them negotiate that. So, two thousand and eight, while our industry

(21:31): was melting down, and otherwise we would have, we actually had at that time a record year because we had this business line over on the side. That kind of proved to us the value of being diversified in our services. And so we need to serve as a trustee or a foductionary for those families.

(21:52): We needed to know how to help them manage that property. You know, we had this really good year in two thousand and eight when everybody else was having a rough time. So we get to two thousand and nine, and everything kind of normalizes, and we act dropped back in the financial performance because of that one time event that occurred, and it was

(22:13): at that point in time that we kind of looked around and thought, “Okay, we can be at this level and we can perform, but we’re really not going to change anybody’s life. We’re not going to make enough money to impact our stockholders. Our staff isn’t going to have some of the opportunities they might have if we grew a bigger organization, and our clients couldn’t get the service and

(22:36): I could get from a large organization.” So, we put together a plan to grow the company dramatically. We just kind of started getting into the market and having conversations. So, you need to plan strategically, but you’ve got to be flexible. We were doing about nine million a year in revenue in two thousand and nine, and we put

(22:56): together a five-year plan to grow the company to twenty-five million dollars. At the end of five years, there were skeptics internally about our ability to do that, but we thought, “Well, we only did this one time, why don’t we try?” And so at the end of the fifth year, with the twenty-five million dollar target in revenue, we actually did a little over thirty million. So, we

(23:19): exceeded a goal that was not entirely sure we could reach that, and that really catapulted us into a series of other things. So over the ten years from two thousand and nine to twenty nineteen, we actually completed sixteen transactions and grew from about two billion in client assets to about thirty billion in client assets, and went from

(23:39): nine million in revenue to about seventy million in revenue. Again, it wasn’t that every step of the way was planned, but we positioned ourselves to allow things to happen and to take advantage of those opportunities when they were presented. I think that’s been, as much as anything, from a

(24:00): business standpoint, how we’ve been able to grow is that we’ve been open to opportunity, and we haven’t been so rigidly connected to a plan that we can adjust it as we move along. Some of the skeptics we’ve won over. I’ve had one in particular that said, “I wasn’t sure that this could happen.” And if you want to say,

(24:23): “I was wrong and you were right,” we can say that. I understand now what the group is trying to communicate, and we’ve achieved what he wasn’t so sure that we could achieve. Others have been very supportive and have been helpful, and so I don’t think I’m overly Pollyanna, but I do tend to take a positive approach to things. I think that helps when you’re trying to build a company.

(24:46): If you’re concerned about things bad happening, and they will, but if you don’t, you know, if you believe you can overcome those or you can manage your way through them, then why not try them? It’s really easy to fall into the trap of trying to put together a very coherent strategic plan. Everybody, you know, consultants and the like,

(25:08): that you’ve got to have a plan, you’ve got to have measurements, making sure that you’re achieving your goals and all. And I absolutely agree with that. But you can’t be so rigid to the plan that you can’t adapt as you move along. Argent is not what I thought it would be. At really almost any point in time. You know,

(25:31): we had certain ideas thirty years ago when we’ve started. We had ideas twenty, fifteen, ten, and we had ideas at the first of this year about what we would look like, and we don’t look like that today. Because life is not linear. Things happen, and I think in our industry, when we’re dealing particularly with families and their wealth,

(25:54): they have things that happen in their life that impact the types of serve says that they need from a firm like ours, and those aren’t planned. I mean, you can plan for the eventuality of things, but the timing of it; you have no idea when something’s going to happen, and so plan and be strategic, but I think you

(26:18): just have to be open to what is presented to you and try to adapt what you’re doing to that. That’s the really good, I think, has been the secret to some of our growth and success, is that we had certain ideas. Some of those have come through, but most of the things that we’re involved in have kind

(26:39): of been presented to us. We had to be open to it. And you’re listening to Kylin McDonald speak almost perfect entrepreneur ease, and that is the language of entrepreneurs, which is by all means, plan but adapt and change, because if you don’t, well, you’re in trouble. And this is why small companies can be big companies. It’s harder for big companies to adapt, and the resilience of small

(27:01): companies and the ability to adapt is how they get and take market share and serve customers in ways that the big boys can’t. Then that Kylin and his team in the small town South were taking on the giants of the industry, well, that’s a story all by itself. When we come back, more of Kylin McDonald’s unlikely story here on our American stories. And we continue with our

(27:38): American stories, and with Kyla McDonald telling the story of Argent Financial Group. He’s the founder and CEO of that group, and moreover, he’s a heck of an entrepreneur. Let’s return to this story, a classic American dream story. I’ve certainly

(27:58): made plenty of mistakes. Sure, I made some today; I just haven’t been told. There was a guy named Tom Watson who worked at IBM in the early twentieth century. He made a mistake: or they invested in something and they lost a huge sum of money. He’s like ten million dollars on this project. And the guy goes into

(28:19): his balls to offer his resignation for wasting this money, and he goes, “I’m not going to accept your resignation.” He goes, “I look at it as I just made a ten-million-dollar investment that you won’t ever do that again.” And I think that’s kind of the attitude that you have to be. We’re going to make mistakes; stand

(28:39): up to them on them, and learn from them and move ahead. We try to e