Hank McLarty With Gratus Capital

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Lee Kantor: [00:00:31] We can’t here another episode of Atlanta Business Radio, and this is going to be a good one. But before we get started, it’s important to recognize our sponsor on pay. Without them, we couldn’t be sharing these important stories. Today on Atlanta Business Radio, we have Hank McLarty with Gratus Capital. Welcome, Hank.

Hank McLarty: [00:00:50] Thank you, Lee. Good to be here.

Lee Kantor: [00:00:52] Well, I’m excited to learn what you’re up to. Tell us a little bit about Gratus Capital. How are you serving, folks?

Hank McLarty: [00:00:58] Well, we’re a full service wealth management firm that I started the firm 17 years ago after a 15 year career with a couple of the big banks that I started at right out of college. So I started grad capital in 2005. And primarily we focus on business owners because I built a firm. The whole goal of starting the firm was to create a team of experts in the areas that affect business owners as they’re building their company and getting ready for some kind of transaction, either a partial sale or a complete sale of the company. And so there’s all kinds of aspects, not just investing, but financial planning, tax strategy, transaction planning, trust and estate. These are issues that in my career I have found to be kind of the hot buttons of what business owners deal with. So I, I set out by building the firm to create a team that could address all of these issues in-house for the client. And that has led to quite a bit of success over the last 17 years.

Lee Kantor: [00:02:01] Now, at the beginning, what was kind of the thinking behind focusing in on that niche? There’s a lot of obviously for wealth management, there’s a lot of places you could have focused on why was helping business owners kind of have successful exits in successfully managing their money? Why was that important to you?

Hank McLarty: [00:02:22] Yeah, good question. So Will, really it emanated from the fact that I found myself after five or six years of being in the wealth management business, I kind of looked around at my clients and the majority of my clients were business owners, so it kind of created its own focus, if you will. One of the things I love about working with business owners is they appreciate hard work because most of them, most business owners have been through good and bad times with their company. They’ve had to roll up their sleeves and really put a lot of effort into getting the company to a successful stage of some kind of partial sale or an entire sale. And as a result for that, I have found that they have a very high appreciation for someone that works really hard and takes really good care of them, maybe more so than someone that is inherited money that they didn’t work for or things of that nature. So I like I like working with the wealth creator because they tend to have a much greater appreciation for the attention to detail and the aspects that we bring to the table.

Lee Kantor: [00:03:26] Now, when you are working with people who own businesses and a lot of times their wealth is kind of tied to their business, is that kind of an area? You have to manage their expectations because in their head they might think their business is worth, you know, ten X and then a buyer might think it’s worth five X and it takes maybe some adjustment on the owner’s part to really understand why that is.

Hank McLarty: [00:03:51] Yeah, I think that’s part of it. I mean, I have actually found that a lot of business owners throughout the life cycle of their business, they’ve had some valuation work done. So they understand typically a pretty good feel for what the value of their business is. I think actually along those lines, though, probably the hardest thing being a business owner and transitioning into a liquidation or partial liquidation is an entrepreneur or business owner is used to being in control of all aspects. You know, if they they need to make more money, they just work a little harder in the business if they need to have higher cash flow. If the business is successful, they can take more money out of the company. So basically they’re kind of in the control panel able to turn the dials and do what they need to do when they go through a transaction like what we’ve been talking about. You know, they end up working with someone that they’re no longer in control, meaning that if they work with our firm, we’re selecting the investments and obviously discussing all of that with them, but we’re making recommendations on how to set up their wills and their trusts and how to do some pre transaction planning to save taxes using some different techniques when they sell their business. And then ultimately we’re kind of in charge of their cash flow. So it’s our job to manage the money and select the investments that provide a good, solid, safe return. A line I like to use is typically entrepreneurs have built their wealth by being very concentrated in one company or one stock, so they’ve had a lot of risk but a lot of reward there. Once they built that wealth, then the way to maintain the wealth is through diversification and working with a team that they can trust because they’re no longer in control of every aspect of it. So that’s a huge transition for them to go from running the show from top to bottom every day to having to trust a team that’s handling a lot of things for them.

Lee Kantor: [00:05:38] Now, What types of conversations are you having nowadays with folks, with the people who have maybe pulled the trigger and have recently retired and now they see all that work and like you said, their lack of control in a chaotic financial situation that’s occurring right now.

Hank McLarty: [00:05:56] That is an active part of discussions right now. Yeah, I think I’ve been in this business for 30 years, so I’ve been through lots of bear markets and lots of down cycles with with the economy and recessions and so forth. And so I have 110% confidence that we’re going to get through this in the next six to 9 to 12 months, maybe sooner. But transitioning that confidence to clients through our team who have recently had a liquidating event and they’re no longer in control, that takes a lot of mentoring and coaching and communication and and a lot of empathy, trying to understand the client’s position and where they’re coming from. And even though I know 100%, everything’s going to be fine, that the client needs some some reassurance of that when you go through times like this. So that can be everything from just vocabulary and counseling through discussion that can be showing really strong historical charts and data that can tell the story as well to clients to ease their mind that the market’s going to be just fine. And then a lot of that has to do with really understanding that client’s risk tolerance and where they should be invested and selecting the investments that are going to be most suitable for them. Because oftentimes when the market’s going up, everybody thinks they’re aggressive until the market goes down and they realize they’re really risk tolerance. Is very low. So getting that out of clients and creating the right portfolio to generate the cash flows and the and the growth that they need, while also combining what they’re able to handle on the downside of the market.

Lee Kantor: [00:07:34] And that’s why it’s so important to have a trusted advisor like you and your team kind of having these conversations because the psychology of this is real. You know, when you’re investing, when you’re in that stage of your life, when you’re investing, you know, a down market is you’re buying things on sale. But when you’re kind of spending all of your nest egg, then you start freaking out a little bit. And if you don’t have somebody with a kind of a steady hand, it can be very stressful and you could make impulsive, really bad moves.

Hank McLarty: [00:08:09] Yeah, 100%. And I think no matter how sophisticated an investor someone is when you’re talking about for most people, their family is the absolute number one most important thing. But in my business, you know, the wealth management that we manage, the wealth and the assets that we manage for clients are a close second. And that’s not because the clients are greedy or only focused on money, it’s because they’ve spent their whole life building this this principle or the wealth that they’ve created. And that principle is going to either make them successful or unsuccessful in the goals that they’ve set for their family, for themselves, for for the next generation and other generations that they may be planning on leaving assets to and their family. And so if this isn’t done right, then something that’s almost as important as their family can end up being a very negative situation. So I think being successful in this business means being able to treat the assets and the planning and the strategies that we implement as if they’re your own. And then you can really kind of take on the role of the client, put yourself in their shoes, have the empathy that’s necessary to work with them and get them through times like this.

Lee Kantor: [00:09:23] Now, you mentioned that you’ve been in business for a hot minute and you’ve been serving the Atlanta community for a while. Can you give some advice for other business owners when it comes to kind of putting together a team? Immersing yourself in the community and then kind of having your team and culture really believe in that big why? And that the the importance of the mission and then how altogether you’re much stronger than any one of you are individually.

Hank McLarty: [00:09:54] Yeah, I love that question. Sure. So one of my roles as the CEO of Gravitas Capital is to drive the culture, and I take that role very seriously. So we have a vision for our firm that includes ten exiting our company over the next ten years. But there’s two other components to the to the vision. I want us to ten x our company over ten years, which is not typical but not unheard of. But if we can ten x the company over the next ten years, while at the same time our client experience even gets better and our client experience is, is we use Net Promoter score data to rank our client experience. And so our client experience is at the very, very high end of our industry. And so we’re measuring that. And usually when a company is growing rapidly, the client experience and the team member, the people on our team, their experience suffers because you get so focused on earnings and growth and things of that nature that you take your eye off the ball with culture and clients. And so I want to grow the firm ten X, but I want our client experience to even get better, which is going to be difficult because it’s very high as it is now, according to our clients. And I want our team to be raving fans of where they work. And so in order for us to achieve all three of these kind of prongs of my vision, it’s going to take every bit of leadership skill that I have.

Hank McLarty: [00:11:24] And that’s why I set this vision for our team to kind of have a North Star that we’re working towards and to keep them motivated and focused. And you would be shocked at the number of people that we interview because we’re hiring regularly to accommodate our growth, the number of people that we interview that when we tell them about our vision and how we live out our values and how important our values are to our culture. And these are things that I talk about with our team daily. You would be shocked at the number of people we interview that say, I haven’t talked to any companies that have a stated vision or I haven’t talked to any company that really talks a lot about their culture and their values. And it’s the number one thing we lead with when we’re talking to potential new team members at our company. So I think keeping people motivated and focused on us being able to accomplish this vision as a team, but we will never accomplish it as a group of individuals is a message they hear from me regularly. But we live that out and we give out awards for our culture. We give out awards for our value, and it’s something our values and it’s something that we’ve translated into community service projects and other things that we do as a company to give back to Atlanta, which has been so good to us over the years.

Lee Kantor: [00:12:33] Can you share a little bit about how you are immersing yourself in the community and maybe talk about your work with Make-A-Wish, Georgia, and how that was chosen as an area of focus?

Hank McLarty: [00:12:47] Sure. I’ll start with Make-A-Wish only because I got involved with Make-A-Wish long before I even started Gravis Capital. So my my oldest son is 26. He’ll be 26 next month. So when he was born, I actually got involved with Make-A-Wish and I was really just looking for an organization that. I really like to see the impact of the time, effort and money that I put into a nonprofit and would make a wish I could meet the kids. I can meet the families, and I could I could see a difference that I was making by by paying for wishes or granting wishes and being kind of the financial engine behind that particular wish that I paid for. So I actually got to meet the people that I was impacting, which is a really big deal to me, rather than just an organization doing good. But I can’t really see the impact I was personally making. So Make-A-Wish has been my focus since 1996, so for quite a while and it’s very near and dear to me. I was the chairman of Make-A-Wish, Vice Chairman. I’ve chaired many of their events and so forth, but at this point I’m no longer allowed to be on the board because I’ve served on the board for too long. So now I just help them raise money. But I love working with the kids and the families. It’s a it’s a big deal to me. And so as you transition that to gratis, you know, why the community service work that we do, I think it’s just mainly there’s several things I want our team to realize how fortunate we are and going out and stocking diapers for mothers that don’t have the money to pay for diapers or doing gardening work in Piedmont Park, or I could probably name 50 different entities that we volunteered and worked for, but we do it every three months.

Hank McLarty: [00:14:29] We close the office every three months, and our team picks which the which community service project we’re going to do. And we go out, everybody in the office and we work all day long and we take lots of pictures and videos and then we share with our clients each year the different portfolio of pictures of the different community service projects that we did throughout the year. So it’s become kind of ingrained in our culture as a fun day for us to go do some work and then go have a margarita and some Mexican food afterwards or something like that as a team and get a bite and something to drink and kind of hang out. So it’s something we all look forward to, but it’s really a way for us to give back because everybody in our firm is fortunate in some way or another, much more so than many of the people that we serve when we do these projects. And it kind of makes the things that are important come to light on those days where sometimes we get bogged down in the day to day work.

Lee Kantor: [00:15:27] Now you, as you work with so many business owners here in the metro Atlanta area, do you have kind of a feel for the Atlanta business ecosystem? Is there is how do you see it comparing to maybe other areas in the country?

Hank McLarty: [00:15:46] Yeah. So, well, we do have the majority of our clients are in Atlanta, but we have a very large client base in Palm Beach, Florida, also in North Carolina. We have clients all over the country, but the predominant highest percentage of clients in one area would be in Atlanta. So so I think that does give me exposure to other markets with other clients where it is easy for me to answer your question with a little bit of a comparison, I think Atlanta is just full of energy. It’s a very transient city, a lot of headquarters here from companies from all over the country, which means a lot of people in Atlanta from all over the country. Believe it or not, I was actually born here in Atlanta. So I’m one of the few in the Atlanta area that’s actually from here and a native of Atlanta. So, you know, Atlanta just kind of got a new fresh feel to it. There’s a lot of new businesses in Atlanta, a lot of new ideas, lots of technology, incubators coming out of different schools and different areas of the city. So it’s just kind of an up and coming area. Lots of movie production here. So there’s just a lot of energy and kind of fresh ideas. It’s a great place to work from because it’s so easy to get from our our airport all over the country, pretty easy with direct flights. So there’s a lot of things that contribute to that. To this being an environment is a great place to kind of start a company, attract talent, build your talent and things of that nature. So I do think that Atlanta, if you were going to start a company with a fresh idea, Atlanta’s a great geographical location to do it.

Lee Kantor: [00:17:22] Yeah, I think that the diversity of the economy really gives us a leg up where a lot of communities have maybe one or two main industries are Economy is so diverse, like you said, from film to music to, you know, technology with Georgia Tech here and the incubators that are coming out from the tech area, it just really diverse so that if one area is struggling, there’s going to be another area invariably that’s going to be doing well. So I think that helps us kind of stay strong no matter what’s really happening in the economy.

Hank McLarty: [00:17:57] Yeah, agreed. Agreed.

Lee Kantor: [00:18:01] Now, so you you mentioned earlier that you’re looking to ten X growth moving forward. What can we do to help? What do you need more of.

Hank McLarty: [00:18:12] Business owners now? I think we’ve developed in addition to being a a well rounded, well balanced wealth management firm, one of our areas of expertise that I don’t see in a lot of other firms is we’re we really have a high expertise and concentrated risk, meaning someone that has most of their net worth tied up in a stock with really low basis that we can hedge or use some creative and sophisticated ways to to diversify that asset that takes some expertise and knowledge of options. And when I when I say options, I mean like stock options and trading options. So there’s there are some areas that that while I say we’re very well rounded and the trust and estate and tax and asset management all that there are some areas that are driving lots of clients to us right now and one of those primary areas is concentrated wealth or being able to help people diversify out of positions that are otherwise very difficult to do due to taxes or other issues with the market that we don’t have time to get into now. But that’s one of our areas of expertise. And so we are getting lots of interest from clients all over the country coming to us by word of mouth because of that specific area.

Lee Kantor: [00:19:35] And is there a story you can share? Don’t name the name of the person, but maybe they came to you with some challenges and explain how you were able to help them overcome them.

Hank McLarty: [00:19:44] Oh, gosh. Oh, there’s so many stories there. Yeah. You know, I think one of our clients is the chairman of a very, very successful publicly traded company. And I think that that particular relationship is one that illustrates kind of everything we do. So we that that particular client has children and has grandchildren. And so we have had to help him navigate getting liquidity in the stock that he is the chairman of the company for. We have had to completely reorganize and rework all of the trust and estate documents to make sure as much of his family’s assets as possible or transitioning to different generations in a tax friendly way. And, you know, with that comes obviously as someone at his level, he’s got lots of investments that we’re monitoring and tracking for him, some of which we have that he made on his own. But our job is to look at everything the client has, whether we recommended it to them or not, and kind of be able to put our finger on the big picture of what he’s doing and make recommendations around that. So it’s an all encompassing, almost a family office type situation of what we’re doing for he and his family.

Hank McLarty: [00:21:06] And I think we have saved them millions and millions of dollars in estate, potential estate taxes. We’ve saved them millions of dollars in tax strategy. And, you know, according to the client who has worked with lots of wealth management firms and and lots of different investment options over the life of his career and so forth, you know, what we’ve been able to do for him, according to him, is is some of the best work that he’s ever dealt with. And so we’re proud of that. And obviously, we want to make sure our clients are happy and that their experience is great. And he regularly confirms with us what his how his experience has been with our firm. So we have 700 different households that we work with, give or take a few, so around 700 households that we work with and each one of them is important to us. So I could I could easily have 700 different stories for you, but that’s the first one. When you asked me the question that came to mind.

Lee Kantor: [00:22:04] Now, is that the kind of the sweet spot of an ideal client is somebody that’s working on or with a public company? Or do you have business owners of all sizes?

Hank McLarty: [00:22:16] Now? I would actually say the majority of our clients are actually private business owners that have built a company themselves. You know, they started it with an idea, built it up, and these companies range in size from small to a hundreds of millions of dollars in value. And typically the majority of our clients are more private based companies where they’re being pursued by a private equity firm or another company that thinks it would be a good strategic fit for them to acquire the company or a part of it. And we help them with the planning of that, how to make sure they minimize taxes and make that transaction as efficient and productive as possible for them. And then we take them beyond that. And to the now, we’re the cash flow generating engine for that particular client. We’re making sure that all their the things that they want to achieve and they’re in their lifestyle month to month, year to year and so forth, that we’re able to provide the resources for them to do that with and give them the planning and the confidence that they’re able to get all of this done without having to worry about it too much. Our goal is for our clients to have peace of mind and be able to make good, well informed decisions about their assets and their wealth. And so, yeah, but again, most of our clients are actually working with private, private companies.

Lee Kantor: [00:23:37] And if somebody wants to learn more, what is the website? What’s the best way to get a hold of you or somebody on the team.

Hank McLarty: [00:23:43] Yeah W WW dot greatest capital dot com great US capital.

Lee Kantor: [00:23:49] Good stuff Hank thank you so much for sharing your story today. You’re doing important work and we appreciate you now.

Hank McLarty: [00:23:55] Thank you Lee I enjoyed it and I appreciate the time on your show.

Lee Kantor: [00:23:58] All right. This is Lee Kantor. We’ll see all next time on Atlanta Business Radio.

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