Financial advisors and former Dynasty Financial Partners executives Michael Brown and Brian Flynn have left Magnus Financial Group, a New York registered investment advisor backed by Merchant, to launch Journey Strategic Wealth, an RIA/partnership, with practice management coach Penny Phillips, founder of Thrivos Consulting.
The firm, based in Summit, N.J., will start with just over $2 billion in assets. It is structured as a hybrid RIA, with Purshe Kaplan Sterling Investments as the broker/dealer, but the model is a sort of spin on the aggregator approach. They are looking to tuck in advisor teams from all over the country, and will provide more services to advisors than the typical RIA, doubling down on practice management consulting. Journey will add other coaches shortly with different types of practice management expertise. Phillips’ specialty is human capital management.
“There’s a difference between having an internal practice management team, which is really a business development team,” Phillips said in an interview with WealthManagement.com. “Versus somebody who’s saying to them, ‘I’m going to go through with you on a monthly basis what your budget is, what you should be spending on marketing, whether you should be using HubSpot or Mailchimp,’ and then actually implementing those initiatives for them. That’s doubling down on practice management.”
While she has stepped away from managing Thrivos day-to-day, the firm still has four coaching partners who continue to take on new advisor clients and work with advisor teams.
The Journey team said they had grown tired of watching firms invest in RIAs just to help them start a business, and weren’t really working alongside them to help them grow meaningfully. That’s one of the reasons they started Journey—to build solid relationships with advisors and help them on an ongoing basis.
“I feel our big differentiator is really that client and advisor experience, where this isn’t just you’re bringing in advisors on, you’re transitioning them, they’re part of our team and then, ‘Alright we’ll talk to you in six months.’ I’ve lived it,” Flynn said.
“If you’re going to work somewhere where the people at the time are really doing something purely for the fact that they’re trying to accumulate as many advisors as they can, I don’t want to be a part of that anymore. I want to be part of a place where it’s a real partnership of advisors and people that are going to support the advisors and ultimately the clients," Flynn added. "There’s no agenda. We’re not looking to build out a TAMP. We’re not looking to build out some tech platform for people. This is really a place for advisors to come and give them the best-in-class service, technology and investments with a group of people that have the same goal and the same vision. We want to grow our businesses, but we want to service our clients.”
When an advisor joins the firm, they come under Journey’s ADV, but they still own their book of business if they decide to leave. Journey will provide everything the advisor needs to run the business, including operations and billing, human resources and payroll, investment management, financial planning support, technology stack, home office support and marketing. The advisor can keep their administrative staff, associate advisors and anyone else who is client-facing, and their entire team goes onto Journey’s payroll. The advisor will likely get a payout of around 50% to 60% of gross revenue, given that the firm is covering all of these services.
“We are going to give you a payout that’s likely better than what you were netting as an independent business owner, but that is reflective of us covering all of your services,” Phillips said.
The model is ideal for an advisor who wants to be independent, but doesn’t want to do all the work a CEO does.
Recent advances in technology and the ease of working remotely was one of the reasons Brown and Flynn decided to leave Magnus and start their own venture. All of their service providers, which include BlackRock, Fidelity, Orion and Riskalyze, were very supportive, and the fact that they were able to gain assets during the pandemic opened their eyes to the possibilities.
They also wanted to own equity in their own shop, an opportunity they didn’t have at Magnus.
“Through my experience and Brian’s experience at Dynasty, we’ve watched advisors leave either wirehouses or other independent RIAs,” Brown said. “We’ve watched them be very successful—the vast majority of them. And we said, ‘We can do this ourselves.’”