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“5 Things Every CEO Should Know About Navigating The World Of Finance” With Michael Karsa

Published 04-03-2020

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“Do the right thing”. If you’re constantly keeping both your clients’ and employees’ best interests in mind, great outcomes trickle down from there.

As part of my series about the “How to Navigate and Succeed in the Modern World of Finance”, I had the pleasure of interviewing Michael Karsa

Michael joined Lido Advisors, LLC in September 2015. He was tasked with leading the charge in developing Lido’s Midwest presence. With the help of his team, Mr. Karsa has grown the Chicago office to over $600 million in assets under management. In January 2020, Michael became the youngest Managing Director in the history of the company.

Prior to joining Lido, Mr. Karsa was a lead financial advisor for a boutique hybrid advisory firm, where he managed 20 advisors specializing in tax planning and alternative investments for affluent families. Prior to that, Mike spent two years working as a financial advisor for ING, where he took a comprehensive approach to plan his clients’ portfolios ranging from investment management and insurance to tax and estate planning.

Mr. Karsa graduated from the Tippie College of Business at the University of Iowa, with a Bachelor of Business Administration degree in Finance.

Mike currently resides in Chicago, where he enjoys playing golf, tennis, and spending time with family and friends.


Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

What initially drew me toward the world of finance were the experiences I had with my father at a young age. Every morning, before school, he would be watching the talking heads on CNBC, listening to their take on the markets. Whatever they had to say, both positive and negative, seemed to influence his mood, and set the tone for the rest of the day. It was clear to me that the world of finance was what made the world go ‘round, and I wanted to be a part of it. The tipping point came in 2008, during the financial crisis. I was a senior in high school and would soon be starting college. I experienced firsthand the amount of stress the markets had on my parents’ livelihood. Concerns about funding college for my sister and me, their retirement, and future job stability questions impacted my entire family. It was clear they didn’t have an indispensable resource to turn to during such turbulent times, and I wanted to be an indispensable resource for them in the future.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

Early in my career, I started off how most financial advisors do, by building a book of business from scratch. The main method at the time was cold calling. On one of my initial calls, I got through my introduction and the prospective client asked, “Is this a recording?”. I learned from that point on the importance of connecting with a prospective or current client. Being a real person and relatable is a major factor because, at the end of the day, clients will want to work with someone they like and trust.

Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?

I often listen to NPR’s “How I Built This”, where they interview founders of both public and privately held companies. The common theme among all founders/CEOs interviewed was that they’re all faced with adversity early into starting the company. The struggle is typically one that would cause most individuals to throw in the towel, but due to the passion, short-term pain/long-term pleasure philosophy, and driven mindset, they all overcome the obstacles. I bring a similar mindset to work every day.

Are you working on any exciting new projects now at Lido Advisors? How do you think that will help people?

We’re constantly evolving at Lido, and always looking to stay ahead of the curve when it comes to investment strategies. My team and I are building out custom option trades that can be structured around existing positions in a taxable account. These trades can offer continued tax deferral and upside potential, while most importantly providing a downside buffer and protection from the market.

Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?

When dealing with HNW investor assets, millions of dollars and their financial livelihoods are at stake on a daily basis. The vision of the Chicago office I lead is for clients to have peace of mind, and at the end of the day, be able to sleep better at night. The way we accomplish this is by building trust, strong communication, and investment strategies that seek to achieve consistent, durable returns with a focus on cash flow. The benefits of this vision have paid dividends, especially in these times. With the recent market volatility driven by the coronavirus, instead of clients being fearful about the future of their portfolio, they are instead thanking us for giving them that peace of mind.

Do you have a “number one principle” that guides you through the ups and downs of running a business?

“Do the right thing”. If you’re constantly keeping both your clients’ and employees’ best interests in mind, great outcomes trickle down from there.

Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?

At Lido, we leverage multiple lead sources who are all centers of influence within their respective industries. I look at our COIs as our clients, first and foremost. I make sure clear expectations are set from the beginning, and that communication remains strong from the beginning to the end of the referral process. It builds trust with the referral source and implies that their referral will also receive a first-class experience.

If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?

It depends on what stage of growth their company is experiencing. In my opinion, the foundation for any good company is the employees. You can throw as much money as you want at a company, but if they don’t have the people in place to execute, you’re going to end up in the same place you were before the VC funding, but with less equity. VC capital is appropriate once there is a strong foundation, and if you’re working with a VC that has specific industry knowledge relative to your business. I personally view our home office as my VC funding. The executive team is all industry experts, and by leveraging their experience and capital, the growth has continued exponentially.

What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?

I would suggest looking at your peers, or other companies you strive to become. Specific to my industry, there are over 13,000 RIAs across the country, and they seem to be getting acquired left and right. What you’re worth is what others are willing to pay.

What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill? From your experience do you have any general advice about how to boost growth and “restart their engines”?

Although not always true, I’ve heard the saying that “doing the same thing repeatedly and expecting different results is the definition of insanity”. Oftentimes, businesses that have slowed growth are stuck in their old ways. We live in an era that is technology-driven, and there are new technologies that seemingly come to market every day. If you’re not leveraging technology to grow your business, you’re doing it wrong.

What are the most common financial mistakes you have seen other businesses make? What should one keep in mind to avoid that?

Businesses that look to grow too quickly can result in a “house of cards” scenario. Client experience is the root of all service businesses, and focusing too much on growth can take the focus away from that.

Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.

  1. Client Experience — If the client has a great experience, they are not only more likely to send referrals down the road, they’re also more likely to share their experience with the original referral source. This will give the original referral source additional confidence, and it will all trickle down from there. As an example, I was given my first referral from a COI. The COI had set expectations that the client had a finance background, had self-managed their finances from the beginning, and was hard-headed. I knew it would be a difficult prospect, but was set on converting the client since I was confident we were a strong fit, and knew it was a test from the COI. Not only did this difficult prospect become a client, but we’ve received more converted referrals from both the client and original COI.
  2. Determination — You always hear the saying, “If it was easy, everyone would do it”. The same applies to this industry. Jobs in personal finance tend to pay well, but that’s because nothing is handed to you. Building a book of business from scratch is an uphill battle, especially the first 5 years, getting increasingly easier each year. Most of my friends chose to go into finance working as an analyst in the back office. I was initially envious of their consistent income and job stability immediately out of college. Eight years later, I’m light years ahead by many metrics, and most importantly, I love what I do.
  3. Mentoring — Given the ups and downs in this career early on, it’s extremely important to have someone to turn to and help steer you in the right direction. Having a mentor that successfully started their own firm or built their own book of business from scratch can save you years of spinning your tires. I’ve had a couple of strong mentors since day one and can contribute a large part of my success to their guidance. One example would be the philosophy of targeting a specific market and becoming an expert to those prospects/clients. Early in my career, I educated myself on the pension plan, 401k, health and insurance benefits for a specific Fortune 500 company. From there, I was able to market myself as an expert on those benefits and gained many clients that way.
  4. Industry Knowledge — It’s very important to keep up with the ever-changing world of finance. This can range from changes in tax code and estate law to the investment world. A recent example would be the SECURE Act that was implemented in December 2019. The main part that caught headlines was the deferral of RMDs from IRA accounts until age 72. Most investors were unaware of the drawbacks, like non-spouse beneficiaries now being forced to spend down the inherited IRA over ten years. For estate planning purposes, this makes the consideration for Roth conversions increasingly important. Most clients were unaware of the ten-year forced withdrawal, and it has led to new prospective clients converting as well as strengthening the relationship of existing clients.
  5. Adaptability — This industry is constantly changing, and you need to be willing to adapt to keep up. This can range from varying investment strategies being discussed as the market environment changes, to the fundamental ways of doing business. For example, due to the recent quarantine caused by COVID-19, it has forced all meetings to take place over the phone or in a virtual capacity. I’ve been running screen-share/video meetings for years, and my clients are already comfortable with this process, so little has changed. We’re able to communicate in a way that is as effective as an in-person meeting, all within the safety and comfort of our homes.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

First and foremost, I feel it’s extremely important that the day-to-day activities you’re involved with at the firm consist of projects you are passionate about. Money never sleeps, and to thrive in this business, you truly must live, eat, and breathe finance. With that being said, there are so many different paths to focus your attention on. Whether it’s relationship management, business development, portfolio analytics, operations, etc., there are so many worthy goals to fill your day. If you choose to focus your strengths and passions and hire others with complementary skill sets, the sky is the limit.

In addition, having hobbies outside of work that you are passionate about can help prevent burnout. Whether it’s wine tasting, golf, cooking, or other things you enjoy, it’s important to find those passions.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

My movement would be to encourage client-focused businesses vs. profit-driven businesses. If you’re constantly worried about the next dollar coming in, you’re likely to stray from what made you profitable in the first place. If the business is solely focused on the client having a great experience, both the client and the business win.

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