Before and during his time as CEO of the AIG-owned broker-dealer American General Securities (1995-2007), he saw “as an executive, you want to be viewed as a person that people trust. They need to know you genuinely care. … Once [people] know you care, then they generally tend to open up, and you can make some deposits into their personal banking account.”
That is helpful, Kalbaugh says, “because there are times that will require me to make a withdrawal. If I make a withdrawal while having made a bunch of deposits, that makes the withdrawal a little less painful.”
He says he learned about this dynamic from Voya’s Martin, who could speak easily and effectively to Wall Street analysts, and from former AIG CEO Hank Greenberg.
Martin’s most critical advice to him? “You need to [make deposits in others]. And the good part is that it’s free.”
While good leaders don’t always say yes to others, “they know you’re going to try. If I say, ‘I’m not doing this one,’ but … I’ve treated you fairly along the way, that’s usually easier [for them] to understand.”
As a leader, “You need to have that give and take, because it is not always an easy street. I want to make sure that I can get things done. And [this approach has] worked well. It’s who I am, but it’s also been a very conscious effort on my part.”
Reflecting on what is most influencing the financial services business, Kalbaugh points to “the velocity of change.”
“I’ve done this [work] now for 30-plus years. Look at where this industry went from — when I was a wire operator punching in trades to [be sent to] an exchange floor — to today, when our advisors can do this at a beach in Tahiti or elsewhere on a laptop. It’s a very different world,” he said.
At a leadership seminar he attended with LPL CEO Dan Arnold a few years ago, two things jumped out at him. “However fast you’re running now, run faster; [your current speed] ain’t fast enough,” Kalbaugh said.
Plus, “If anything, change will accelerate. So you’ve got to look at people and process and talent and systems,” he explained.
LPL, of course, isn’t immune to these trends. “It’s hard to stay a market leader. We’re trying to make sure we’ve got the best team on the field to create the best firm we can to help our advisors and institutions. It feels pretty good, actually,” he added.
While he insists he doesn’t “do well at pontificating,” Kalbaugh says it’s “really important for our advisors to keep pushing to evolve.”
“It’s a tough industry. You’ve got a wonderful opportunity in front of you, but you’ll have to clearly define the spaces you want to play in, the market you serve and how you will do that. Do that well, and you’ll stand out in the crowd.”
Innovation, of course, is key to addressing change at both the advisor level and firm level, Kalbaugh says, and Arnold has done a good job at leading this charge at LPL: “He constantly pushes the firm around innovation and has helped lead this cultural transformation, putting the client in front — which is paying some really good dividends.”
How does Arnold do this? “He’s helped crystallize why we come in everyday. Because at the end of the day, … it’s [about] people’s hard-earned money, which could be their life savings or their ability to send their kids to school,” Kalbaugh explained.
As Casady told him earlier, “There’s a very noble reason we show up every day and that’s to make our advisors’ lives a little easier, so they can do the job that they need to do, which is to help their clients,” Kalbaugh said. “You see Dan pushing on all those buttons.”
Rich Steinmeier, head of Business Development for LPL, is also making a difference thanks to the different views he brings to “how we look at strategy and even at the markets that we serve. He’s opened up doors that we otherwise didn’t have,” according to Kalbaugh, which should help the firm stand out and better compete in the future.
“You’ve seen it through the acquisition of Allen and Company, and with the expansion of the independent model to include employee services. That gives us a bigger pond to serve more and more people,” he said.
Asking the right questions is critical. Steinmeier would consider, “How do I continue to do what I’m doing and do it well, take care of our existing advisors and institutions, but [also] what markets can I open up and do that well to differentiate us?”
Of course, Arnold — who took the reins from then-CEO Casady in early 2017 — must unify and successfully execute these efforts, Kalbaugh adds: “He’s created a good team that plays well together in the sandbox, and is focused on the end game and the goal of the growth of the company and the support of our advisors. If we do that well, we all win, right?”
“One of the reasons I’m here is because of Mark,” Kalbaugh says. “He was one of the final interviews I had to get across the goal line [and join LPL].”
During the interview, Casady asked him, “Why are you here? Why are you talking to us?” according to Kalbaugh.
“I said, ‘You know, Mark, I’m a little tired of competing with you guys and maybe it would be a good time to join [LPL].’ And we both chuckled, because it was a little bit of joking. Then he said, “That’s cool. That’s a good answer, because what we’re really trying to do is just build the best team we can build.’”
Kalbaugh replied, “What I’m looking to do, Mark, is to make sure I can have an impact in whatever I do, and this feels like a pretty good opportunity.’”
Casady went on to play “a huge role in my early development at LPL. I still talk to him regularly. He’s got some wonderful skills that I learned from — like his deal[making], M&A ability. He’s done really well there,” Kalbaugh said.
The two spoke recently about Kalbaugh’s retirement, he said: “I’ve bounced this around with [Casady]. He was obviously a couple of years ahead of me on that.”
And what lies ahead for Kalbaugh? “There’s another chapter,” he said. “I don’t know what that’ll be yet, but … to figure that out I thought I needed to step out of the fast lane. As you step out of the fast lane, you can look at more things. You could see what interests you and what may not interest you. I’ll figure that out.”
After taking a second for further reflection, the retiring executive said: “This has been an amazing career. The stretch at LPL has been, you know, beyond my wildest imaginations. And what I mean is that it’s been very humbling. What they’ve given to me, I’ll never be able to pay that back.”