Published September 2, 2021
John was a 50-year-old advisor who had been at 3 different wirehouses over his 25-year career in financial services. Before becoming a financial advisor, John had been an institutional trader for 10 years. John was managing about $100m in AUM with 80% in fee-based accounts and 20% in traditional brokerage. Each year, he had been doing less and less commission-based business.
Compliance oversight at the wirehouse was becoming increasingly burdensome. Additionally, the firm’s reputation was becoming tarnished with some well-publicized scandals. Clients were asking questions that were getting uncomfortable and frustrating to answer. Furthermore, the firm’s compensation structure was increasingly tilted against advisors and teams managing less than $1B. John’s approximate payout was 32% of the revenue he generated. John decided that a change was needed. He knew he was ready to become entirely fee based and desired a move to a Registered Investment Advisory (RIA). However, aggregators and national RIAs seemed unappealing from an economic and branding perspective. In his heart, John knew that he was an entrepreneurial spirit and desired to build and own his own firm. He also knew that he needed a trusted partner to both guide him in the nuance of the RIA industry and provide him with the technology and investment management infrastructure to operate his firm.
John engaged with GeoWealth to coordinate his transition to and launch of a new RIA, Elmore Street Advisors.
- GeoWealth introduced John to an RIA-focused custodian (TD Ameritrade) and collaborated with the custodian’s transition services team to successfully move his client accounts over to the new RIA – Elmore Street Advisors.
- GeoWealth introduced John to a law firm specializing in “Broker Protocol” to provide needed legal support to simultaneously resign from the wirehouse and register the new RIA, as well as developing all the associated regulatory filings. Crucially, the law firm’s guidance prevented John from realizing any legal ramifications as the Broker Protocol requirements were maintained. The law firm also provided on-going compliance support for the first year.
- GeoWealth’s proprietary Turnkey Asset Management Platform (TAMP) assumed all middle and back-office function for Elmore Street Advisors: model portfolio trading, performance reporting, billing, and the aggregation of outside alternative assets.
- GeoWealth created a private labeled advisor portal, client portal, and client app (Apple iOS and Android) where client household, account, portfolio, and position data could be viewed.
- GeoWealth built a custom model portfolio marketplace for Elmore Street Advisors consisting of John’s preferred managers. Additionally, GeoWealth’s integrated advisor service center allowed the creation and implementation of Unified Managed Accounts (UMA) consisting of multiple model portfolios (sleeves) inside a single account.
- GeoWealth provided Elmore Street Advisors a dedicated relationship manager and access to the advisor services team. In conjunction, this offering eased John’s transition to the RIA market with training, support, and a resource for any questions as they arose.
John successfully moved over 90% of his client accounts over to Elmore Street Advisors. The less than 10% that were lost were mostly legacy brokerage assets. John improved his actual payout over 180% - from 32% of revenue at the wirehouse to 90% at his new RIA after expenses. Obviously, the equity value of John’s book of business increased dramatically. Equally important to John, he created a business and brand of his own. Elmore Street Advisors portrayed integrity, trust, and a stellar reputation. One year after launch, Elmore Street Advisors was doing so well that John was in talks to add one or two ex-wirehouse colleagues to the firm.
This case study is provided for illustrative purposes only and is meant to provide an example of GeoWealth’s process and methodology. There can be no assurance that GeoWealth will be able to achieve similar results in comparable situations. No portion of this case study is to be interpreted as a testimonial or endorsement of GeoWealth’s investment advisory services.