Peter Mallouk is the president and chief investment officer of Creative Planning and affiliated companies. Peter’s companies provide comprehensive wealth management services to their clients, including investment management, financial planning, charitable planning, retirement plan consulting, and tax and estate planning services.
Creative Planning provides wealth management services to high net worth clients, manages over $20 billion for clients in all fifty states and abroad, and has been featured twice as the #1 Independent Wealth Management Firm in the United States by CNBC (2014 and 2015).
Peter is featured in every eligible listing of Barron’s as one of the Top 100 Independent Financial Advisors in America and the only advisor featured at #1 three years in a row (2013, 2014, and 2015). In every ranking since 2005, Peter is featured on Robb Report Worth Magazine’s list of the Top 100 Financial Advisors in America. Peter is featured in Boomer Advisor as the #1 Advisor in America for Baby Boomers. Creative Planning is featured in Forbes as one of the Top 50 Financial Advisory Firms in America, Investment News’s Top 50 Wealth Management Firms in America, and Financial Time’s Top RIAs. Creative Planning is also featured in Ingram’s Magazine’s issues covering Best Places to Work and Most Charitable Organizations and has been named the Reader’s Choice #1 Wealth Management Firm.
Peter graduated from the University of Kansas in 1993 with four majors, including degrees in business administration and economics. He went on to earn a law degree and Master of Business Administration in 1996, also at the University of Kansas. Peter has also earned the CERTIFIED FINANCIAL PLANNER™ designation.
Peter is the founder, current executive board member, and former five-year chairman of KC CAN!, an organization of volunteers dedicated to improving the quality of life of children in Kansas City. KC CAN!’s signature project is Safety Street, a “real life” street where second graders throughout the city go as an educational field trip to learn about bus, car, bike, pedestrian, and fire safety.
Peter has served on the board of directors for Pathway to Hope, American Stroke Foundation, St. Michael’s Finance Council, Kansas City Hospice, and KC CAN!. Peter is married to Veronica and has three children: Michael, John Peter, and Gabrielle.
I grew up in Kansas City, Missouri. My parents were immigrants who were big on education. So I went to school, and to the University of Kansas, where I majored in psychology, political science, business, and economics. Then I went on to get a law degree and an MBA, also from the University of Kansas. After graduation, I returned to Kansas City and spent a couple of years holding various positions with financial and practice management aspects, then quickly found myself in the financial and estate planning world, where I worked with individual clients and helped them with wills, trusts, and taxes (like how to reduce capital gains, estate, or income taxes). I largely did this for other firms’ clients. So essentially, brokerage houses and independent advisors would bring me in to help their clients with certain things. I would do my part, then the client’s financial advisor would take it from there. I did this from 1998 to 2003.
Then I noticed there’s a space in the wealth management world for firms that really tailor portfolios to their clients’ needs and that are able to do more than just pick some “in-house” mutual funds or other investment products. There was also clearly a need for an advisor that could assist with tax advice, estate advice, and so on. Since 1998, I had handled the financial planning and legal work for Creative Planning’s (a planning and investment firm) clients, while at the same time working with hundreds of other clients. I purchased Creative Planning on January 1, 2004. At the time I had dozens of clients and a very small base of assets under management, probably less than a hundred million. From there, I began to reinvent it into what it is today: one of the largest, if not the largest, independent holistic wealth management firms in the country.
It was already a place where I was providing financial and estate planning services for clients, from 1998 to 2004. So I already knew and greatly admired the principal, who was ready to retire. When I found out about this, I thought it was a great opportunity to not have to go through the legal structure of creating a registered investment advisor.
It was. At first I wanted to change the name, but have since learned to embrace it. We have also evolved to a point where the name is very appropriate. Much of what we do is really getting to know a client’s situation and goals well enough to restructure many of their moving pieces to help them accomplish their goals.
I basically came in and just took over that practice, and every employee from then to now is new. So I just started hiring from there.
Yes. From day one through today, I was and am involved in getting new clients and working with existing clients. From that point on, I was the only owner and I started a process to take care of the clients that were there in a different way. They eventually started to refer new clients, and it accelerated far quicker than I ever imagined.
Well, one of the things that I observed, going from office to office for so many years, is that the financial advisor world is divided into two groups: 1) There’s people who really understand investments, financial planning, estate planning, and/or tax planning, and 2) There’s a group that is just good at sales. This is the relationship guy/gal. And if you look at what we call the typical, successful financial advisor, it’s usually from the latter group. It’s the guy that’s networking, golfing, going to parties, and charity events—signing people up. That group seems to have more clients than the group that is really more analytical, actually doing the financial services. This is different from many other professions. Medicine doesn’t work that way. Law doesn’t work that way. Tax doesn’t work that way. But financial advisory does, because there’s really not a lot of clear-cut criteria. If you go see a doctor, they went to medical school and passed some tests. No matter what doctor you go to, there’s some degree of competence. This is not the case if you meet a hundred financial advisors. The majority of them have absolutely no education with investments and/or financial advice. It’s a very unique marketplace, and the people who survive in the industry are the ones who sell more effectively than others. That didn’t sit well with me. My dad is a physician, and growing up I knew he had some fairly negative experiences with advisors. I wanted to build a place that was so much better than the alternatives that clients would come to us on their own. So I was really determined to have a format that would work by attraction. It also didn’t hurt that at the time I had zero faith in my ability to sell. I thought, to succeed, I had better have something of value. I just wanted to deliver a service that offered exceptional value that was so separated, in terms of getting real advice from very competent people, that it would attract the clients to it.
The first person I hired was Molly Rothove. She was right out of college, and she had been an intern for another financial advisor I had worked with, who ultimately moved to a different state and recommended Molly. I knew she was diligent and also cared about clients. I initially sent her to interview with other financial advisors I knew. She was looking for a job and I wasn’t ready to hire yet. She met with them and basically came back to me and said, “Hey, I was offered jobs at all these places, but I don’t want any of them because they want me to be a salesperson. They want me to go out and sell to my family and everyone I know. They want me to sell their company’s financial products, and I believe that’s a conflict of interest.” I remember, even then, when I couldn’t afford to hire anyone, I kept thinking that this is exactly the kind of person I want to hire. This is exactly what I believe. I believe financial advisors should not be selling their own financial products. This was a novel concept then and unfortunately is still so today. She really felt that way, so she became the first person I hired.
In the beginning, funding wasn’t needed. We would grow, add some clients, and then hire someone. We would grow, add some clients, and then hire someone. We got to 2008 with that model. And then we got to a point where, in order to really take the next step, it was going to require a large amount of capital. We were simply growing too fast to ease into hiring. I had to commit to building out serious infrastructure and capacity. So around then I got a loan. At that point, I basically mortgaged the building, my law practice, Creative Planning, and pretty much every asset the banks deemed of value. I used the money to hire the people I needed to maintain the quality of service and get ahead of the growth that was occurring. I didn’t feel like it was a risk; more prospective clients were calling than I imagined, and I knew that if I continued to build it, they would come.
It was the same as it is now. I call it the millionaire or multimillionaire next door. Probably our biggest group of clients is a household worth a few million dollars. What’s changed is now we have a lot more ultra-wealthy clients, so we have the whole subset of the “$25 million and up” and “$100 million and up” that wasn’t there in the beginning. We also have a large subset now of clients from $50,000 to $500,000, which was an exception early on as well. But the typical client today is still “I worked my whole life and I’ve got a few million dollars.”
Originally, for a couple of years, I only worked with physicians and I was going to try to make their lives easier by helping them with financial and practice management items. It took me a few years to figure out this was impossible. The practice management side was just so different that you couldn’t go from one doctor to another and do it. So then I switched over to pure financial advisory.
No. I grew one client at a time, by referral.
The whole way with the exception of a small group that folded into Creative in 2009 with around $80 million in assets under management (AUM).
Yes. The business was mildly profitable in the first few years and much healthier from then to 2008. Then it was extremely unprofitable for a couple of years while we invested in growth.
No. I love this, and I feel passionate about what we’re doing and I think we have a direct impact on people. This job is easy to feel good about. My favorite part of the job is working with clients and finding ways to improve what we can do for them. Next, I love working with our team, and I especially love watching and helping people reach their full potential. Creative is a great place for someone in the industry to really see what they are made of and what they are capable of, and I love doing what I can to help them accomplish their goals. I can’t imagine doing anything else.
Well, originally, I didn’t think this was going to be a national success. I thought, “Hey, I’m going to build a practice, and I bet I can build a successful one. I see an opening in the marketplace.” And the opening for me was pretty clear, what would work in the marketplace, but I did not have in my mind the right level of success. I thought, “Hey, we might attract a few hundred million dollars and one hundred clients,” but that happened in the first year. It was extremely rapid growth, and that I was very surprised by. But now that we’re here, and we’ve got twelve thousand clients in fifty states, it turns out it is the best place we can possibly be, because we’re very centralized in an area where there’s a lot of talent with a strong work ethic and a very educated group of people, here in Kansas City. It’s a great place to be centralized. Many people on the coasts love that we’re in Kansas City because we’re associated, rightfully so I think, with a certain type of values. I know in New York, California, Florida, and Texas, we have thousands of clients that live there, but their money is managed out of Kansas City. Now we have local financial advisors that meet with them, who are employed by Creative, but the money itself is managed out of Kansas City. For me personally, it’s turned out to be great as well, because wherever I need to be in the country, it’s pretty reasonable travel wise. If I had to do it over again, I’d put the pin on the map in the exact same place.
I find that successful people share certain outlooks and traits, but their habits are largely irrelevant. For the most part, what they all have in common is their ability to identify a need out in the marketplace or someone else has identified the need and they have found a better way to do it. People may not even know their own needs. Steve Jobs once said, “People don’t know what they want until you give it to them.” Successful people identify a need, or something others don’t even know they need, and then execute. For example, the guy who invented Uber. No one was asking for Uber. He just said, “Hey, there’s a need out there. Nobody knows about it,” and he created it. It doesn’t matter what his habits are. He could be the kind of guy that sleeps until noon. He had a great idea, there was a need for it, and he had the ability to execute on it. To me, that’s really the common trait successful people have in common. I work with an enormous amount of very successful people. I work with many of our firm’s largest clients, and I’ve always looked for these common traits. For example, I’m meeting with one client next week who won’t meet before 10:30 AM, because he likes to sleep until 9:30 in the morning. And this is a guy worth $500 million. So I think people are just different, and the most common trait they share is that they’re able to identify that need and execute on it, not what they do in the morning.
Yes. I believe luck is a big factor and rarely acknowledged to the extent it should be. I’ve also encountered a lot of people who were born on third base, and they believe they’ve hit a homerun. Then I look at my own situation and say, “I’m a white, male, college-educated American who’s healthy with two loving and encouraging parents.” That’s quite a head start. I’m always amazed when clients say, “I did all this, and everyone can do it.” That’s just not true. A lot of how life turns out is derivative of where you’re born and how you grew up. Yes, people can always overcome odds. Anybody can become an NBA player, but it helps if you're 6’10”. Your odds are just better. On top of all that, you still need luck. So for me, I had a model that I knew was attracting a lot of clients and was going to attract capital. It was more successful than I ever thought it would be. Our firm grew from less than $100 million to $500 million AUM in four years. But then ’08 and ’09 happened, and people came to us in droves. Within two years, we were a $2.5 billion firm because the way we managed money worked. It was low cost, tax sensitive, and took advantage of down markets. It made a lot of sense. But most importantly, we weren’t using any of our own mutual funds or hedge funds. So clients were firing their financial advisors, saying, “Hey, my investments aren’t doing well, and by the way, they’re your own house’s investments.” It just attracted a lot of capital to us. And then, after that, you had the whole Bernie Madoff ordeal. That got everybody looking at their own financial advisor. If people are looking at their financial advisor, and you’re doing better than the others, that’s good for you too. We got lucky there. Would we have been successful anyway? Yes. To this degree or this quickly? No. The markets created the turmoil that got everyone looking around. We had a great offering, but it was luck that created sudden, intense interest. Whether you’re Steve Jobs, Bill Gates, or the guy who invented Uber, somewhere along the way, there was a break for you that was beyond you being smart and having a great idea.
I think you have to believe you can do something for you to have a realistic chance of it happening, so to some degree yes, but it’s not enough. If a basketball player thinks they can’t sink a three-point shot, they probably can’t. If they believe they can do it, now they are on the right path, but they still need ability, training, coaching, and effort. Believing it will come to you is a prerequisite to success but not enough by itself.
I can write down a goal and say, “I want to manage $30 billion,” but I don’t control a lot of the variables that are going to make that happen. So for me, it’s about setting goals that I can control. I know I have a certain amount of clients, and I know I want to communicate with them a certain amount. I know I want to have a certain talent of financial advisors in front of them. And I want to have a method in place to take care of them and make them happy so they are satisfied and refer others. I can measure those things, so my goals are always around those kinds of things. So for example, if I have a goal to add $2 billion between now and the end of the year, but every financial market in the world goes down, I cannot control that, so it’s a pointless goal. But I can control if my clients stay with us, if they add funds, and if my clients refer, so my goals tend to be more focused on things that I can control that will have the largest influence on what I am trying to achieve. All of my goals are executed by delivering value. You have to constantly improve and try to stay ahead of the pack as much as possible.
I have some ritual to my daily planning. I take my kids to school in the morning, and then I’m usually in my office around 8:15 AM. My calendar will be stacked from 8:30 AM to 5:00 PM, with the exception of a break that I try to take almost every day, around the lunch hour. I might not actually use it to go out to lunch, but it’s the one hour on my calendar that will be blocked to deal with whatever I have to deal with. But the rest of it is scheduled. A lot of people in my profession will do things like, “I’ll only do client reviews on Tuesdays or Thursdays, because Mondays and Wednesdays are for me to catch up and Fridays are for me to prepare for the next week.” I don’t do any of that. So for me, if I’ve got a hundred clients and they want to do an annual review, I’ll do it whenever they want to do it. If they want to do it at 8:30 AM or 4:00 PM, great. To me, it’s the same hour, no matter what, for that review. So I may as well be accommodating to the client. But I do make sure that every minute of my day is figured out. I’m using it to be as productive as possible. Some meetings will be management. Some will be clients. Some will be media and things like that, but every hour is too valuable, both professionally and personally, to leave open.
For me, it’s usually 8:15 AM to 5:15 PM, Monday through Friday, and I check in every day, whether it’s a weekend or vacation. I usually travel to another city one day a week and spend an overnight in another city one day a month. I can easily have a more successful practice if I was willing to increase the travel schedule, but right now I have three young kids and I’m just not willing to do that. This is a give-and-take. I run my schedule on an idea that a “yes” to something is a “no” to something else. So I love hanging out with my wife. I love hanging out with my kids. But I also love my job, clients, and coworkers. It makes me want to say yes to everything, but if I’ve got someone in Connecticut and he’s got $20 million and has to meet tomorrow, but that means I’m going to miss my kid at a spelling bee, I’m not going to do it. So I’m always trying to fill up the calendar, but with a sense of priority.
No. When I started, I was bored out of my mind. There were only a few dozen clients. I could literally be working only ten hours per week and dying to be busier. It took a long time to build up a client base where I was busy and could hire people. It kept getting busier and busier to the point I was working seventy or more hours per week. About two years ago, it started to get easier because we got to a scale where we started to attract the best in the business. Now that Creative is one of the largest independent wealth management firms in the country, there are hundreds of people applying here, and we can hire the very top talent, and that means I have more and more people that can do many things as well as I can or even better than I can.
Whereas, if you go back three or four years ago, anything that was complex, far away, or a big opportunity I had to be engaged in myself. So now I find myself working much less than a few years ago.
I have them written all over! I’ve got three written on my desk, so each time I open a drawer, I see a quote. One that I really like is “Dwell as near as possible to the channel in which your life flows,” which is a [Henry David] Thoreau quote. So it tries to remind me of the sense of priority—where I should be spending my time. I open another drawer and find Luke 12:48, which is “To whom much is given much is expected.” You just realize that if you’re really fortunate, really lucky, that you want to have a sense that success isn’t really all yours and to make things a little easier for other people.
I read a lot. I read, basically, anything financial, whether I think I’m going to find it interesting or not. I’ll read a huge amount of financial books, whether they’re investments, investor psychology, wealth management, or estate planning. I’ll read all of that. I’m reminded of an interview with—I can’t remember if it was Kobe Bryant or Michael Jordan, where the interviewer asked, “What do you do when practice is over?” and he said, “I shoot baskets.” Usually, I’ll find that the people who are really successful at something, they just like it so much that they never feel like they’re working. So whether it’s a musician, athlete, or somebody in business, you’re probably going to lose if you are competing against someone more passionate than you. If you are in the NBA, it’s going to be hard to beat Jordan or Bryant if, after practice, they’re shooting baskets.
The first book I read that had a high impact was Khalil Gibran's The Prophet. My uncle gave it to me as a teenager and I've read it once a year ever since. One of the best books I’ve ever read is a simple, tiny book that I make everyone coming into Creative Planning read called How Full is Your Bucket? by Tom Rath. The basic message is that when you meet somebody, you usually make them fe