RIA on the waves: Scott Leonard's three-year adventure running his practice from a sailing ship at sea

Scott Leonard has dreamed about sailing around the world since he was a child. Now, as we wrote about in January, he’s actually doing it—with his wife Mandi and three sons, not to mention a business to help run. Armed with a 50-foot catamaran and satellite communications technology, Leonard’s three-year circumnavigation is meant to prove that success and freedom can go together. He’s spent years planning for the trip, including structuring his RIA in a way that has empowered his colleagues and made him, in his words, “intentionally irrelevant” in the day-to-day functioning of the business. We caught up with Leonard recently as he made one of his quarterly visits back to the states to visit with clients and colleagues. What did we learn? That Leonard underestimated Mother Nature big time. One major incident has demonstrated that being away from the people who need him has been way harder than Leonard planned—but not in the way you might expect. Yet for all his travails, we suspect that after reading this update, you may pine to spend some time in Leonard’s shoes.

Steve Garmhausen: So how far have you gotten on your voyage around the world?

Scott Leonard: Right now the boat is in the Dominican Republic. As you and I are talking today, Hurricane Irene is two days from passing the boat, and that’s been one of our biggest challenges so far.

When I left to come home, it didn’t look like there was going to be a major storm. It wasn’t until I landed in California on Saturday and checked the weather again that I said, “Oh, no.” I’d left my wife and kids behind on the boat; my wife still can’t really drive the boat, and she doesn’t know all the lines and stuff. The boat had to be physically moved, it had to be tied in a different way, and all the stuff had to be pulled off of the boat.

Home sweet office.

While the three boys are somewhat helpful, they’re still five, nine and 11, and they can only do so much. I had to talk them through it, and we got help from people at the marina to get the boat prepared for the coming hurricane. It was hard and frustrating for me to try to explain things over the phone. Talk about working remotely!

And the boat is not insured for hurricanes where it currently sits. That’s probably been the biggest failure so far: Not properly appreciating what it takes to go where we wanted in the time we wanted and in the season we wanted. That makes sense because it’s where I have the least amount of experience.

The good news is that I got everybody off the boat and into an apartment Monday night in case something happened. What was great about the experience was that it really forced my wife to acknowledge stuff she had not known about the boat; it forced her to learn stuff on the fly, too.

SG: Where had you planned to be by this point?

SL: We’d hoped to be all the way off the coast of Venezuela, Aruba, Bonaire, Trinidad/Tobago, all that area which is back out of the hurricane zone. The plan when we left Florida in early July was to make a really fast run down through the Bahamas, Turks/Caicos, Dominican Republic, maybe the whole chain of Caribbean islands.

We ended up fighting easterly seas and winds, and we had to wait for weather opportunities. We couldn’t move the boat because we were fighting currents that were much worse than I had anticipated. We had to wait until the weather was OK to go. We’ve now been in the Dominican Republic almost a month, partly because tropical storm Emily locked us up for two weeks in one area.

When you grow up in California, the weather is always 72 degrees and sunny, so you don’t look at the weather report. That’s been a big lesson for me. I didn’t realize that weather is there all the time and you’re waiting for the few lulls in the weather to make your next move. I went into this trip with a rule that we’d let the weather dictate our travels. We violated it by started late in the season, at the beginning of hurricane season. That was a function of the kids the finishing school year and, to some extent, work.

SG: How has working remotely gone?

SL: Trovena has actually gone very, very well. I’m only going to say surprisingly well because I spent less time [on business] than I thought I’d have to.

One thing I’ve realized is that we waste a lot of time when we work. I thought I was extremely efficient, but when you arrive at a physical office and you’re feeling like you have to be there until two or three or whatever, that forces you to waste a lot of time that you don’t realize you’re wasting.

SG: Has your physical absence caused any problems?

SL: Nothing has come up at all. It’s been great in that sense. Any problems for us, as I foresee them, are going to be client-related problems. I’m not sure what that would be. Any mistake we’d make relative to a client would happen whether I was there or not. There might be the perception that a mistake happened because I was gone, and we might lose a client. But other than that, I don’t see a [potential] problem.

I’ll be coming home every quarter, and I’m totally available by phone whenever.

SG: What’s been most challenging about working remotely?

SL: Well, the Internet connection can be slow. One of the things we did in designing our technology to support remote offices—including my boat—was to create cloud-based computing services for everything we do. That’s great for everyone in the U.S., as we do a ton of travel. However, we rely on really good, solid broadband. And while I have broadband on the boat, it’s not as fast as a 3G phone would be. That’s been frustrating. It doesn’t prevent me from doing my work, but it really slows me down.

Then, if I’m on the Internet and the kids want to get on too, that really slows things down. Or if I’m on the telephone, it’s set up so that the telephone has priority. I could be on the phone and my Internet speed crawls to nothing. That can be difficult, when you’re trying to pull up client data while talking, that sort of thing.

SG: Turning to family matters, how are you handling the kids’ schooling?

SL: We are home schooling. In fact, school was meant to have started for everyone, but we took hurricane days off. My wife is the one in charge of being the teacher. The homeschooling program we’re using is very, very turnkey. They sent us huge boxes—it’s almost like a classroom in a box. There’s a lot of self study, and the programs are designed so that the older kids can help the younger ones. You know they saying: To really master something, you teach it.

SG: OK, how do you keep everyone on that boat from killing each other? My family can barely survive a weekend getaway.

SL: It’s hard, really hard. One of the things that’s unique about this boat is that everyone has their own bedroom, which they didn’t at home. That’s everyone’s sanctuary. We separate them very quickly if we see bickering start, that’s part of it. But for as much as they’re together, it hasn’t been that bad. We’ve been very fortunate.

SG: Tell the truth, how much did you stress when the market was going haywire in August and you were thousands of miles away from your clients?

SL: Very little! Less than I probably would have if I had been here. The reason is that a lot of the emotional stress that clients have—and even advisers have—is, I think, a function of our media.

There are three 24/7 cable channels purely designed around the market and making money. Then there’s all the other news (outlets), including on the Internet. And every one of them wants to (present) different reasons to be sad, upset and worried.

I’ve joked with clients on the phone, I’ve said, “I want to let you know that here in the Dominican Republic, no one seems to know or care about what’s going on in the U.S. financial system right now.” It puts things in perspective. The world is not coming to an end just because S&P downgraded us or because our politicians can’t seem to get along. At the end of the day we all need to live our lives. That’s so evident when you’re dealing with third-world countries, where they’re just focused on dealing with their lives, bringing fruit to market that day and getting it sold.

We have the luxury in the U.S. of being much more thoughtful and concerned about things that, to a large extent, are out of our control.

SG: Are you managing to get any sleep?

SL: Ultimately yes. But we’ll do maybe 20 or 36 hours at a stretch, something like that, and that means you’re sailing overnight. My wife and I take turns doing that. And we’ve been in rough weather, so really when it’s your turn to be sleeping, you’re not—the boat is rolling, and you’re waiting for something to happen where you have to go out to help. When we finally get someplace, we spend a day, almost two, recuperating.

SG: Are you able to exercise?

SL: I have a really bad back, and I did a lot Pilates when I was at home. I’m not doing that on the boat at all, and that’s one thing I miss. But other than that, we do get plenty of exercise because of the nature of our lives.

In L.A., no one walks. But on these trips, that’s all you do when you don’t have a car. The grocery stores aren’t where you moor your boat. You spend a lot of time walking and exploring. Also, we’re huge water people. I played water polo at UCLA—that explains the back injury—which the kids have now started playing. We also brought with us a stand-up paddle board, sea kayaks and scuba gear. We spend a lot of time in the water, and a lot of time just walking.

I’ve actually lost some weight on the trip because we eat so much healthier. One of our sons needs to have a normal sodium diet—not a low-sodium diet, just a normal-sodium diet. But that’s almost impossible for us to do in the U.S. When you’re traveling, though, you don’t have as much processed food or preservatives. The food is so much fresher. I’ve been eating a lot better.

SG: So when you head back to the Dominican Republic to resume the trip, what will your enthusiasm level be?

SL: Well, I have mixed feelings. It’s nice to get a break from the boys. My wife, who was a stay-at-home mom, has spent a lot more time with them than I did. [On the trip], they’re always with you, always around.

On the other hand, I kind of miss our lives being so much more simple. Just other day, after dinner, I thought, “We need to get these guys off the boat for a little bit.” We were at a marina and we went for a walk along the beach for a good while. I was holding hands with my five-year-old and nine-year-old, walking down the beach, talking about everything and nothing, just walking and relaxing. Even though we live near the beach, we had never really done that.

When I was a kid, this trip for me was about wanting to sail around the world. Right now, it’s really about simplifying our lives and spending quality time with our kids in this really important time in their lives. They are developing who they are going to be as people.

Name: Scott Leonard, a founding partner of Trovena, LLC

Location: Redondo Beach, Calif. Trovena also has offices in San Diego, Austin, Texas, and Roseland, N.J.

Years in business: 19

Assets under management: $550 million, of which $85 million is with Trovena Investment Advisors (CQ), a firm established to serve lower-net-worth clients.

Employees: 13