A New Strategy Requires a New Culture at Sage Rutty

Sage Rutty is a fourth-generation family business founded in 1915 in Rochester, New York. The company initially sold bonds and for most of its existence was a full-service stock brokerage firm. The current CEO, Wayne Holly, joined the company in 1970. He described the culture of Sage Rutty at the time he was hired as highly competitive, with a “we versus they” attitude, leading to a great deal of conflict between ownership and brokers. There were no common goals or a shared vision for the company. Brokers seemed to live in separate silos with their own customers and ways of doing business.

This all changed when deregulation of stock transactions and discount brokerage companies appeared. In an industry driven by commissions, these changes challenged firms like Sage Rutty. The company needed to change if it were to hold on to clients. The company reassessed its business strategy and decided to become a financial advisory firm, shifting its revenue stream from brokerage commissions to fees earned as a percentage of money under advisement. However, the culture that existed in the company made this change challenging.

Holly knew the company culture needed to change if it were to be successful with its new strategy. He convened a strategy meeting with all employees and the board of directors to get everyone’s input and, he hoped, their buy in. A major outcome of this meeting was creation of a Venn diagram, with three overlapping circles:  the first was the client, the second was advisors, and the third was the firm. The core area where all three circles overlapped was referred to as “The Zone.” The Zone represented alignment of all stakeholders. This led to the defining of core values, which included trust, inclusion, and autonomy--the latter giving advisors ownership of their client base and the job security that goes along with it.

Holly became a student of change. He also learned to listen to his employees. He attributed his own change to coaching, his peer advisory group, and one book, Deep Change, by Robert E. Quinn. He also attributed his success to support from his father, who had preceded him as CEO.  These influencers gave him confidence to create the culture that would eliminate conflict and support the core values of trust, inclusion, and alignment. He is aware that this change would be his family’s legacy of creating a sustainable company that would succeed into the future for all stakeholders.

One of the biggest internal obstacles to culture change was the financial advisors who were not willing to accept the company’s core values. The tenure of these advisors was short lived under the new culture. The company has zero tolerance for advisors or any other employee who do not fit its culture, even if they are productive. In an unusual practice, the company allows advisors to take their customers with them when leaving the firm. This rarely happens unless the advisor is asked to leave the company.

The financial success of the company is evidenced by annual increases in assets under management and pre-tax profits that have increased annually for the past 10 years. Twenty percent of pre-tax profits are shared with employees 

Other measures of success are retention of employees and recognition of the company as one of the best places to work in in the country by Fortune magazine. The company newsletter, Wayne’s World, communicates news about the company and its employees, publicizes events, and recognizes employee tenure by acknowledging work anniversaries for each employee every five years. Not surprisingly, many anniversaries are for long-term tenures of 10, 15, 20, and even 25 years of employment. These anniversaries are special occasions, and the company goes to great lengths to honor and celebrate them. In addition, Holly writes and sends a personal note to every employee on his or her work anniversary and birthday.

Celebrations are a way of life at the company--ranging from internal chili cookoffs to volunteering to build houses with Habitat for Humanity. In a sincere gesture of gratitude, Holly regularly dons the role of chef, preparing and serving meals for employees.

There were external challenges to Sage Rutty’s new culture. The recession of 2008-2009 hit the financial markets hard. At Sage Rutty, the amount of money under management shrank, straining company revenues while eroding profits. Company management made the decision not to lay off any advisors or staff. Recently, this no-layoff policy was extended to deal with the COVID-19 pandemic, which has seen a big selloff of securities. Job security is embedded into the Sage Rutty culture.

The company engages in many socially responsible activities. When one of its employees lost a son to a skateboarding accident, the company donated $25,000, matched by another $25,000 raised by employees, to help build a skateboard park and secure the naming rights to a section of the park as a memorial for the son who had died. Many other acts of charity and compassion for helping needy families are part of the company DNA. The company also encourages its advisors to serve on local not-for-profit corporations’ boards and supports these organizations financially.

The transformation of Sage Rutty from a traditional brokerage house, plagued with internal conflict and lack of alignment between brokers and company goals, to a successful financial advisory firm could not have happened without a change in culture. The company continues to strive to live within the Zone, where alignment of stakeholders, trust, inclusion, autonomy, and social responsibility have fueled its success.

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