Financial Strategy Network LLC, a Chicago-based practice with $550 million in assets under management, has broken away from Raymond James Financial Services and launched its own full-service registered investment advisor. The four partners in the practice—Jim Weil, Craig Richart, Jeff Toner, and Steve Merdinger—will custody with Pershing Advisor Solutions. FSN caters to clients with net worth of $2 million to $20 million; the average portfolio is $1.5 million, Weil said in an interview with Registered Rep. today.
The four advisors started in 1992 at an insurance-based broker/dealer run at the time by Cigna, working together to share administrative support. Tired of product incentives (“We really wanted out of that environment,” Weil says), the group moved to Raymond James in 1999. Their decision to go fully independent carries no rancor, he says: “That was a very good spot for 12 years. I have great respect for Raymond James, and I still think it’s a good spot for a lot of people.”
But their practice had become more than 95 percent fee-based. (It had its own RIA throughout its time at Raymond James, Weil said.) The advisors felt they could earn more working independently than they could working with a broker/dealer under a fee structure that involved paying for services they weren’t always using, he said. The practice in many ways already was functioning as an independent office, Weil observed: It had its own office space, a staff of 20 associates, separate payroll and employee benefits.
Jim Fulp, managing director at the Independent Contractor Division of Raymond James Financial Services, said the b/d would have preferred that Weil’s team stayed. Raymond James has a “significant” number of advisors who run their own RIAs through the company’s Investment Advisors Division, Fulp said in a statement released by the company.
“For Jim Weil and his fellow shareholders in FSN, they came to the determination that there were economic and other business reasons which made it attractive for them to move to an independent account custodian with highly competitive pricing of both trading and other services for their clients,” Fulp’s statement said.
FSN’s due dilligence before its big move took about 10 months, Weil said. Scrutinizing issues such as technology platforms and compliance issues were at the top of the to-do list. Their big staff helped; 10 people at FSN have CFPs—including Weil—or advanced degrees. “I think if I were on my own, this process would be more intimidating,” Weil said.
Pershing made sense as a custodian, he said, because they prefer working with advisors with large AUM. “Pershing targets a little higher-sized group than a lot of the other custodians do, so they have fewer people to try to spread the resources across,” Weil said. “We felt like they were more of a business-to-business provider, as opposed to a business-to-individual advisor provider.”
Any advice for other advisors considering independence? “I would say everything takes a little longer than you think, so however long you think it’s going to take, add a little time to it.”