Wirehouse to Wirehouse

We chose this case study to provide a snapshot of a “move” that for many reasons is particularly instructive about our unique approach, the relationships we form with our clients, and the results we achieve. Our consultants work with a broad spectrum of advisors, and this case study is one of their stories.

Often times the work that we do with financial advisors spans months or even, in some instances, many years. Such was the case with a top producing New York wirehouse team that Diamond Consultants moved in the winter of 2009…

I began talking with “Ryan” and “Steve” in the summer of 2004. I would reach out to them periodically to keep them apprised of what was happening in their market, what the competitor firms were offering in terms of transition packages and how their current firm was perceived by other advisors. Ryan and Steve were always receptive and appreciative of my calls knowing that over the years I demonstrated sensitivity, objectivity and a depth of industry knowledge that they found to be a definitive value add. Most important – they trusted me and knew I was never calling to “sell” them on anything so they could speak freely about their frustrations and goals. Repeatedly Ryan and Steve were clear that they were not interested in entertaining the notion of changing firms and that they had a plan to make their one well-timed move when they doubled their annual revenue to $10 million. Sometimes during our conversations they voiced frustrations about their firm, but overall they were able to keep their “eye on the ball” and grow their business. They knew that they had, in me, a trusted advisor and confidant who would keep them apprised of all relevant developments in the industry, ask the provocative questions about their business and goals for growth, and provide an educated opinion of whether I believed they were still in the right place to continue to grow their business.

Fast forward to the summer of 2008 with continued industry uncertainty and persistent questions about how the final chapter would be written for Ryan and Steve’s firm. I put a call in to the team and suggested that it might be appropriate, at this point, for them to explore their options elsewhere. They agreed, but said, “it is very unlikely that we will leave our firm in the near term, but we trust you implicitly, and will do as you suggest.” They knew that I would provide unbiased counsel based upon their personal and professional goals.

Ryan and Steve’s Questions and Concerns

While Ryan and Steve entered into this process with only mild curiosity about life beyond their firm, they trusted our judgment and decided to take some meetings with competing firms just on an exploratory basis. They expressed the following questions and concerns:

• Is our current platform robust enough to allow us to continue to service our existing high net worth clients and prospects?
• Are we maximizing our ability to access investment banking capabilities for our high net worth clients and use it as a way to significantly drive revenue?
• Is it the right time to monetize our business?
• Is our current firm investing in our business enough and allowing us to grow as quickly as possible?
• Will our firm be under the same management in the next 3-5 years – and what could a change in ownership mean for our business?

The Process

After much discussion about Ryan and Steve’s business model, style, growth objectives, and desire to monetize the business, we agreed that the wirehouse channel would be the best fit. The due diligence process would clarify IF, indeed, they would be better off elsewhere. I arranged the initial meetings and the process began in earnest.

The Wrap-Up

Much to Ryan and Steve’s surprise, after meeting with multiple firms and being guided by me at every turn, it became apparent that a change in firms would not only help them achieve many of the goals they originally articulated, but they also discovered “game changers” such as specialized and unique platform capabilities and enhanced administrative support that would power their business to the next level. They were quickly disabused of their original assumption that all wirehouses were created equal, and acknowledged that while the differences seemed subtle, the ultimate impact on their business would be anything but that. They would be able to monetize the business in a meaningful way, yet also be assured that their clients would be the ultimate beneficiaries of the move by having access to enhanced services including investment banking.

In February of 2009, Ryan and Steve changed firms. Over 90% of their client base moved with them within 90 days, without losing a bit of business momentum. The team has significantly accelerated their growth and feels comfortable in their ability to sustain that momentum with the depth of resources now available to them.

The Lesson

It is certainly not always a clear-cut decision if the time is right to make a move. In fact, more often than not, the advisors I work with agree to do some exploration in order to simply have an updated Plan B – or as an educational exercise to stay current about what the competitive landscape looks like. As in the case of Ryan and Steve, that process yielded results that were not expected but welcomed nonetheless, and moving was the logical choice. Other times, there may not be a significant enough “value add” to justify a move, and I advise against it.

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