Taking the Leap: Starting your own RIA firm

In the first episode of our podcast, learn how one advisor team pushed through doubts to pursue new possibilities in independence. They formed their own Registered Investment Advisor (RIA) firm and gained greater freedom in the process.

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Three advisors walk confidently out of their old firm.

Hear the team's story

Jill Reitmeyer, Nancy Mercado, and Dustin Bench felt limited at their previous firm. None of them possessed a sense of ownership or fulfillment in their day-to-day work. They couldn't help asking, "Are we really living up to our potential?" Find out what they did next.

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Dustin Bench: I remember waking up at 3:30 in the morning, I was worried about letting Jill and Nancy down because at that point I was thinking, "Oh my gosh, you know, I feel like I brought them down this road and what if it doesn't work?"  And that was the first time my confidence wavered a little bit.

Jerry Cobb: Meet Dustin. At that time, he was a successful investment advisor at a large wirehouse firm. And he had decided to leave. To strike out and start his own firm, as an independent Registered Investment Advisor. And honestly, it wasn't the risk that was costing him his sleep. It was the fact that he felt responsible for his two closest office partners, Jill and Nancy, who were leaving with him. What if the plan didn't work?

Dustin Bench: I thought, "Oh man. I could be ruining everybody's lives."

Jerry Cobb: What he didn't know at the time, was how much faith his partners had in him. He didn't realize how the power of having a team is what would help them succeed.

Welcome to your insider's guide to becoming an independent Registered Investment Advisor, or RIA.

I'm Jerry Cobb, Senior Business Consultant at Charles Schwab, and this is How I Became an Independent RIA, an original podcast from Schwab Advisor Services.™

Speaker 1: You get to the point where you're like, "You know what, the risk I can take to leave and be independent is absolutely worth it."

Speaker 2: I felt apprehensiveness, nervousness, but yet excitement.

Speaker 3: You know that you can see the light at the end of the tunnel.

Speaker 1: Really everything we wanted was possible.

Speaker 2: Even when it's hard or more than you thought, you still got to do it.

Speaker 2: Everything that stopped me from taking that next step was just fear and that fear was in the way of me actually being fulfilled.

Speaker 1: Complete freedom and happiness has been the result.

Jerry Cobb: Advisors often take different paths to independence and find success. Some choose to go independent as individuals, while others prefer to start a firm with a team. Today, we'll look at how the independent RIA firm, Altus Wealth Group got off the ground. It's a story about the role a team played in inspiring a successful transition to independence. We'll also check in with an expert on big transitions and the power of partnership. And, as always, we'll get a little practical advice, and bust a few myths about the RIA journey. So you can learn from others as you consider your own path forward.

So let's start with a decision that almost didn't happen. Let's start with Dustin.

Dustin Bench: My income is higher than most people. I've got two kids and a wife and a house, and we're doing the American dream. And it is beautiful and it's great. I go to work. I come home.

Jerry Cobb: Dustin is describing what life was like, working at an investment firm in Colorado Springs. He was in his late 30s, and had been with this company for over 15 years. Work was predictable, the money was good. Life was great.

Dustin Bench:  It felt like we could keep along that path for ever. And that was fine. You know, that was one way to live.

Jerry Cobb: Most of Dustin's work he did with two other senior financial advisors. Nancy and Jill.

Jill had been at the company for most of her career. 

Jill: You know, I had been there for 30 years, and so I always thought I would stay there, I would retire there.

Jerry Cobb: The same was true for Nancy.

Nancy: I never thought that I would be jumping ship, let's put it that way.

Jerry Cobb: But as the months and years ticked by, something intangible started gnawing at them. Sometimes they'd talk about it.

Dustin Bench: Jill, Nancy and I, several times we had this conversation, like, well, are we. We're happy. We're all making good money. Our clients are happy. The other side to it was, am I really living up to my potential?

Jerry Cobb: Over time, the team's priorities shifted. Jill, for instance, bought a house in Michigan—pretty far from the Colorado office. She dreamed of working remotely. But company policy meant that dream would be next to impossible.

Jill: You know, I was being given a lot of restrictions, which really made it such that I couldn't work for the clients and do everything that I wanted and needed to do with them remotely.

Jerry Cobb: Nancy also wanted more freedom. She was a seasoned advisor but felt like she was being treated like a novice.

Nancy: I understand that large wirehouses have to protect their business on all levels, but there should not be a need to have chains or restrictions that you can't do this and you can't do that, and I think more than anything that's what I started to experience.

Jerry Cobb: Their frustration mounted. All they knew was they wanted more. They wanted something better.

Dustin Bench: And it became ridiculous to us to the point where you're like, "You know what? I'm in a place where the risk I could take to be so much better is absolutely worth it."

Jerry Cobb: They had no idea what options existed for them. It was a vision but without a plan. Dustin started some initial research. He learned about hybrid models, independent broker dealer models. He explored opportunities at other wirehouses. But every time he came back to the team, they'd agree that it still didn't feel right.

Jill: So here's what I will tell you will be the shift for me.

Jerry Cobb: A day came when a package landed on Jill's lap. It was a standard marketing mailer any advisor might receive. And in it, it explained the RIA business model and how it worked.

Jill: I handed it to Dustin.

Dustin Bench: She didn't want to hand it to me, but I was kind of the designated person and she knew I was frustrated.

Jill: And I said, "If ever we were to do anything, this would be the platform that I would consider."

Jerry Cobb: And with that, he was off. Dustin rolled up his sleeves and learned everything he could about the RIA model.

Dustin Bench:  I had lots of meetings with attorneys, with compliance people, with technology people and all the aspects that make the business run.

Jerry Cobb: And, the more he learned, the more information he brought back to his colleagues, and the more excited they became. 

Nancy: When Dustin started talking about it, I knew that, okay, I have got to open my mind to this and learn.

Jill: He was excited and had all kinds of information. Just very motivated. 

Jerry Cobb: It was time to make a call. Stay? Or go? Dustin was out in his truck when Jill got him on the phone.

Dustin Bench: And it was about five thirty or six o'clock one afternoon. It was in the fall. I remember I was headed—I live up in the mountains and so I'm driving up, and I knew there was a dead spot ahead of me, but we were in this conversation of, "Oh yeah. This is a great idea." I mean, kind of rehashing what we had already talked about. I thought, "I'm going to pull over and we're finishing this tonight." So I pulled over and I skidded on the side of the road. This dust is going all over. And my first question is, "If we're going to do this, let's pick a date." Sort of silence for a second because I thought, "If we don't pick a date, then it's not real."

Nancy: The only thing that I remember is in terms of a date we said May 5th, Cinco de Mayo for whatever reason we would celebrate.

Jill: Yes this was absolutely a go.

Jerry Cobb: Now it was real. Now they had to make it happen. Now they had to get to work.

There was plenty to do. Not to mention the responsibilities they still had to their existing clients.

Nancy: You owe it to your clients to continue to do business as normal because you always want to give them your all. And you couldn't say anything, absolutely not.

Jerry Cobb: Months of checklists, months of paperwork, months of decisions on everything from setting up compliance to picking out office chairs.

But even though the path to independence had been blazed before and resources and infrastructure were there to support them, Dustin still felt anxious about the decision.

Dustin Bench: I think what I was more worried about was letting Jill and Nancy down because at that point I was thinking, "Oh my gosh, you know, I feel like I brought them down this road and what if it doesn't work?" And that was the first time I—my confidence wavered a little bit and I thought, "Oh man, I could be ruining everybody's lives."

Jerry Cobb: Doubt, fear, nerves… all of that manifested itself at one point or another throughout their transition. Eventually, the team has everything locked into place.

Dustin Bench: We were ready. The office is ready. I kept checking things. We had phone lists ready to call clients.

Jerry Cobb: All they really needed now was their license from the Securities and Exchange Commission. They did their paperwork. Then they waited. And waited.

Nancy: We did not know when the SEC would approve us. Every day we were checking, "Are we approved? Are we approved? No." Then every day Dustin would have to print out those resignation letters and we were carrying it with us.

Dustin Bench: And then I started losing sleep over of what if, what if our clients don't come?

What if they don't understand or care about our story? And that was all scary for me.

Jill: Constant level of stress and anxiety till we left, definitely. It really intensified because you're so close but at any minute you know it can all blow up in your face.

Jerry Cobb: Fortunately, they had each other's backs. 

Jill: It was such a great thing to have partners to lean on, to talk through the difficulties as we, as we came along.

Nancy: So if one of us was kind of down, the other two would pull us up. I mean we would not allow each other to fail.

Jerry Cobb: Finally, in mid-May, the SEC license came through. It was time to resign and launch their independent RIA firm.

Jill: We're all there at 6:30 in the morning.

Dustin Bench: Super nervousness like you're about to get on a roller coaster, and you're excited about it, but you're also afraid.

Jill: My stomach was just full of butterflies.

Dustin Bench: We wanted to be there waiting, so that we could resign as early as possible and get a start on our day.

Jill: And so you're wandering around the office, waiting for the first manager to come in and …

Dustin Bench: It was a long moment. As people are showing up to work, we're saying goodbye to everybody and telling them what we're doing, because our offices are cleaned out. They know. They know we're not going to be there.

Nancy: I remember it was the operations manager, and as soon as he saw us together, he knew.

Jill: That was a weird feeling, too, because for me, 30 years of working there, hand him a piece of paper.

Dustin Bench: The resignation letter that I think I'd printed twelve times, with different dates. 

Jill: And they go, "Okay, hand me your keys." Hand them their keys. "Okay, thank you. See you later."

Dustin Bench: And he said, "I'm really sorry to see you guys go." And gave hugs and that was it.

Jill: Our feeling was just ecstatic. Walked out the door. We walked down to our new location.

Dustin Bench: I'm walking really fast, 'cause I want to get there and open up the office so we can get started.

Nancy: You just wanted to begin your new life so to speak as an independent.

Jill: Walked in that door. Then it was kind of a feeling of wow, here we are.

Dustin Bench: Then it was immediate realization, "This is what we did. Now it's time to work."

Jerry Cobb: Dustin, Jill, and Nancy opened the doors to Altus Wealth Group, their independently owned RIA, on May 19, 2017. I'm sure you're wondering how's business, right? We'll find out, when we check in with Dustin a little later in the show. But first, let's see what we can learn from how this team managed their transition together.

Nikolee Turner: I think it's powerful that Dustin, Joe and Nancy saw themselves as a really strong unit. 

Jerry Cobb: Nikolee Turner is a managing director of business consulting at Charles Schwab.

She helps independent advisors optimize their businesses for growth and take advantage of opportunities or overcome challenges.

Nikolee Turner: The reason why they felt like such a strong unit was because they shared a common purpose and that's really important for RIAs is to know their why or to have a purpose. And that bands people together even if they have different ideas about how the business should be run or what it's eventual future will look like.

Jerry Cobb: And it's not only a shared purpose or vision that makes a strong team.

Nikolee Turner: So, a high performing team is one, in my opinion, that first of all, they have that component of trust but they also then recognize that each of them brings something different to the table. They have a diversity of talent and when you can leverage all the different talents and skills. A true team works interdependently and when they can leverage each other's strengths and talents and emotional support, then they can create that synergy which is being able to get something greater from working together than they could from the sum of each of their efforts and when that comes together and they create that synergy, that's what creates these amazing, thriving RIAs. Also, obviously, great communication, being able to talk to one another, being able to make things really explicit. That goes into that vision again. It's really about the clear picture, not necessarily how grandiose the vision is.

Jerry Cobb: And Dustin's story is typical, in that at the end of the day his team felt a great sense of satisfaction about their choice.

Nikolee Turner: I think that going independent is such a success story because of what happens to the folks after they've gone independent. So that sense of building their own business, building their own firm, that pride in ownership is very common and really the freedom, it's often times the freedom to do what's best for clients, the freedom to be able to serve clients in the way that they have wanted to or the way that they feel is best suited to their interests. They grow fast, they retain a high percentage of the clients that they were serving before. So the independent story is really a success story.

Jerry Cobb: Nikolee Turner is a managing director of business consulting at Charles Schwab.

Jerry Cobb: If there's one looming anxiety that hangs over the heads of every advisor considering independence, it's questions about clients. Will they understand my decision? Will they follow me? It's been two years since Altus Wealth Group opened its doors. And I wanted to know how they tried to answer those questions for themselves.

Dustin Bench: I ran numbers as low as 25% of our clients moving. Almost like nobody was ever going to follow us. I thought, "Okay, that's as good as it's going to get."  But when I started talking to clients, it felt like every single call, everyone was excited. It was, "How do I move and how does this work?" That was super surprising to me.

Jerry Cobb: Sounds like you were able to retain the majority, if not all of your clients. Is that right?

Dustin Bench:  Yeah. I run those numbers a lot, and I think it was close to 95%.

Jerry Cobb: What was the size of your business when you were at the wirehouse and what is the size today, as measured by either clients or assets under management or both?

Dustin Bench:  So our assets under management today are higher than they were before. We manage right around 225 million and our client number is lower. There were so many clients that we had to service at our former firm, that we really didn't have a choice in whether we serviced them or not. Now we do and so now we can provide better service to those clients and we're growing.

Jerry Cobb: What would you have done differently? What didn't pan out the way you had expected?

Dustin Bench:  You know, there was a couple of different things that we relied on. One of them was our phones. So I hired this VOIP company, voice over IP company to get us phone numbers, and we find out the first day we're in here that although it was our same area code, it was a local number 200 miles south of us. And so when local clients were calling from their home phone, they had to call a long-distance number. It was a big deal. We do so much business over the phone that I thought we have just destroyed our business.  But it wasn't a big deal at all when we ended up having to change those numbers and I don't think anyone even remembers what those numbers were.

Dustin Bench:  The other part was we hired a HR company to do payroll for us and they didn't really understand our business. I think it was a call we did just on price, so they're the cheapest one, it's just payroll for a few of us, we can let them do it. We ended up changing them out within a couple months.

Jerry Cobb: What about for you and your teammates there on a personal level, how has this transition impacted your personal lives?

Dustin Bench:  Nancy just had her second grandchild. She spent a month and a half almost away from the office, still working remotely, which was impossible before. Jill spends her summers in Michigan, still working and her winters in Colorado. For me, I look at mostly my kids. I have two young children, they both want to be entrepreneurs and that's something that they saw firsthand and it has really changed their outlook on life.

Jerry Cobb: So summing up, what would be the advice you'd give someone else who might be in the shoes that you were in a couple years back considering a possible move to the independent model?

Dustin Bench:  I would say if you're considering it at all, do yourself and favor and go talk to somebody who's already done it. Spend a few hours with them, and go through all those aspects because it's likely the fears or the concerns that you have, are not really founded. I believe that any advisor that has a good practice, where they're trying to do the right thing for their clients, they're trying to build wealth for their own families and themselves, that there's not a better path than this independent RIA model.

Jerry Cobb: Dustin Bench is one of three founding members of Altus Wealth Group. They're in Colorado Springs, Colorado.

Today's story focused on the power of teamwork, and if you're contemplating a similar move, here are a few things to keep in mind: Anxiety is a natural part of change. You need a vision. And it only takes one person to keep that vision alive for the others. And remember, a strong team is built on trust. And it's that profound trust that gives a team the confidence to take the leap to independence. And when I hear Dustin's story, here's what inspires me most: First, nearly all of their clients at the wirehouse followed them to independence. And that actually aligns with Schwab's own studies. On average, Independent RIAs retain 87% of their clients. Second, Dustin and his team's transition to independence allowed them to build stronger client relationships and have more flexibility in their schedules, all while running a thriving firm that is still growing. And finally, they found the freedom they were looking for, to work the way they wanted to, and live the life they've been dreaming about.

And they're not alone. Thousands of financial advisors across the country take the leap and become independent RIAs. Each story, and each transition, is unique. But the steps they take, and the support they need, is often the same.

Learn more, lots more, about the RIA model and how Schwab Advisor Services can help you forge your own path to independence.

Find us online, at Schwab.com/RIA, or look for the link in the show description to this episode.

I'm Jerry Cobb and this is How I Became an Independent RIA, an original podcast from Schwab Advisor Services.

Speaker 4: Schwab Advisor Services serves independent investment advisors and includes the custody, trading and support services of Schwab.

The comments, views, and opinions expressed in the podcast are those of the speakers and do not necessarily represent the views of Schwab.

They are provided for informational purposes only.

Experiences expressed by advisors may not be representative of the experience of other advisors and are not a guarantee of future success.

The above mentioned firms and their employees are not affiliated with or employees of Schwab unless otherwise noted.

They should not be construed as a recommendation, endorsement of, or sponsorship by Schwab.

Data contained herein from third-party providers is obtained from what are considered reliable sources.

However, its accuracy, completeness or reliability cannot be guaranteed. Copyright 2019 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Independent investment advisors are not owned by, affiliated with or supervised by Schwab.

COMPLIANCE CODE: (1219-96S1)

Key takeaways

Leaving as a team

Bringing other financial advisors with you to the RIA model has its benefits—and unique stressors. Feeling responsible for your teammates is natural and can cause pressure. But starting an RIA together can allow you to divide the workload, supporting each other along the way.

Learn more about breakaway teams >

Exiting your previous firm

Jill, Nancy, and Dustin set their exit date. It helped them create a timeline and made their plans feel real. The day they left their old firm—and their comfortable jobs—to start their new RIA firm was one of fond goodbyes and liberation.

Start planning your transition >

Bringing the pieces together

Dustin, Jill, and Nancy were all in alignment. No one was left out of the loop. They discussed each piece of the business to bring the firm they envisioned to life. 

Get help planning your firm >
 

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The above-mentioned firms and their employees are not affiliated with or employees of Schwab unless otherwise noted. They should not be construed as a recommendation, endorsement of, or sponsorship by Schwab. The views expressed are those of the third party and are provided for informational purposes only. Third-party firms and their employees are not affiliated with or an employee of Schwab. Experiences expressed by advisors may not be representative of the experience of other advisors and are not a guarantee of future success. The data contained herein from third-party providers is obtained from what are considered reliable sources; however, its accuracy, completeness, or reliability cannot be guaranteed.

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