Road to Independence

This week I feel like a pioneer embarking on a journey to discover new lands, with the difference in this case that many have blazed the trail before me. It’s up to us to learn from their experiences. Perhaps some of you are following this blog for this reason. If so, I hope you’ll benefit in some way.

After much thought and consideration, I have decided to go the RIA route and am very comfortable with the decision. I’ve had a great deal of experience with broker/dealers over the years. I’ve had experience with the largest wirehouse to the largest independent B/D and even though each is a little different, there are many similarities. Not to besmirch those companies, they, like all B/Ds, are subject to the same rules and regulations that tend to provide a degree of difficulty for the advisor. Since laws are generally passed because of a few bad apples, sometimes the pendulum swings a bit too far to one side, all in an effort to protect the consumer. So my decision is perhaps, in part, just a matter of timing, but the RIA platform seems much more attractive.
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This week on the Road I saw more progress. My RIA is now approved by the state and I can accept financial planning fees. I have two financial planning clients to begin with. One is an executive with a large corporation and the other is a young professional with a very successful practice in the medical field.
I am still looking for a place to hold the assets. I have been leaning toward the RIA platform – which seems to be a trend – but am unsure at this point. While an RIA offers more control and a higher payout (100% versus 90% +/-), it will require more work and cost to set up. Is the extra cost worth the additional 10% payout? If the production is large enough…certainly!
I think of it this way: It’s as if the RIA arrangement provides a storefront and it’s up to me to determine what to put on the shelves. For instance, if I want to offer insurance products, should I secure a general agent contract with each company I want to do business with or find a “one-stop shop” and run all insurance business through them? I think the latter would be more efficient but would love to hear your comments.

Let’s get back to the asset management decision.

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What’s the saying—change is inevitable? Well, my second week of independence was no exception. I mentioned in my last blog that I had found office space. May I elaborate? It is located in a very nice part of town, central to just about anywhere you’d want to go, and very reasonable. What’s interesting is how it came about. You see, there is another advisor I met some 10 years ago when we both worked at the same very large wirehouse. We have kept in touch over the years and today my office is across the hall from his. It’s part of a suite of offices called Executive Suites. We have a common secretary, copier, reception area, etc. It has a very nice decor and a very professional atmosphere. Maybe not where I’ll be in five years—I have a grand vision of my ultimate office—but it’s more than adequate and certainly better than my original plan of a home office. But as Paul Harvey would say, “Here’s the rest of the story.” (more…)

This week I secured my first financial planning engagement. I’m excited about the prospects going forward. Every day I become more convinced that as advisors continue to “vend” their products to clients, the need for what I do increases. I believe there is a large segment of the market that is tired of being sold financial products. This practice has bred a healthy suspicion in the public’s mind which has created a need for my role as a “personal CFO” or “gatekeeper.” Like many of you, perhaps, I was trained in a wirehouse where finding people and selling products was the accepted way to do business. However, in my opinion this is not being client centered. We should be finding people, accessing their needs, and using products only as a means to satisfy those needs. Today, there is so much opportunity for the advisor who will truly place the client’s interests above his own. Done properly, it creates trust and instills confidence—the very thing our industry needs. I am also finding it liberating to work in an environment with no proprietary products and one that is free from the conflict of interest between client and shareholder.

I am still looking for a place to custody assets.

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