PRESS: REGISTERED REP. WRITTEN BY ANNE FIELD
From Wirehouse To RIA
1 April 2010
Perhaps you can never be too rich or too thin. But you can have too many choices.
As more wirehouse reps decide to ditch Wall Street and head to independent RIAs, they're finding there are a number of possible routes to follow. They can start their own business, with all the challenges that involves. Or, they can join an existing, traditional RIA. Then again, they might opt for a few newer alternatives: doing a deal with a roll-up firm that buys a stake in their practice in exchange for equity or cash. Or, they can find a firm that takes a portion of revenues while assuming care of all back-office and infrastructure support. "The market is laden with choices now," says John Furey, principal of Advisor Growth Strategies, a Phoenix, Ariz., firm that helps advisors make the transition. "The challenge is to sift through the alternatives to find the right fit."
How to decide which path to select? Since there's no one-size-fits-all, we offer the stories of three advisors, each of whom took a different route.
Growing On Their Own
Before the financial upheaval of 2008, Eric Thurber and his five-person team at Morgan Stanley had built a sizeable practice on Silicon Valley's Sand Hill Road, serving venture capitalists and the entrepreneurs they invested in. (He started in 1998 at what was then Solomon Smith Barney). Watching the disaster unfold around him, Thurber knew he didn't want to risk losing everything he had built over a ten-year-period at the firm. So, he and his two partners huddled together and decided it was time to leave. But, they realized, they needed to stay together so they could continue offering the wide range of services - estate planning, investment management and so on - they already provided to clients.
Initially, the partners started investigating five other wirehouses and banks, all of which offered tempting upfront bonuses. But, ultimately, Thurber and his partners decided the wirehouse investment platforms were not what they wanted. In early 2009, they began looking into going independent and calculating what that might involve. Briefly, over two or three weeks, they talked to a handful of RIAs in the area about coming on board. But, in short order, they came to a conclusion: They needed to build their practice on their own terms. With $740 million in assets, they had the resources to do it and do it well. "We realized there might be more risk personally, but with the right platform for our clients, we'd be better off," he says. "I guess we didn't want to be half pregnant."
Over six months, Thurber and his partners threw themselves into the process, spending afternoons, evenings and weekends at one partner's San Francisco home doing research on everything from the best hardware to buy, to office real estate and investment platforms. At the same time, says Thurber, they "leaned on" their custodians, as well as other RIAs, for advice. "We didn't want to reinvent the wheel," he says.
Thirty minutes after officially resigning from their employer in August, they officially launched their firm, Three Bridge Wealth Advisors. "We turned on the switch and we were off," he says.