The road to independence: Attracting and retaining clients

Aug 19, 2019 @ 12:01 am

After 15 years with one wirehouse and five years at another, Don Garman wrote a seven-figure check to release himself from an employment contract so he could start his own Registered Investment Advisor (RIA) firm, Mirador Capital Partners, in Pleasanton, Calif. Driven by a desire to provide unconflicted advice as a fiduciary, he was motivated to better serve his current clients. At the same time, he wondered whether those clients would follow him to his own firm and whether he would be able to attract new clients without a wirehouse name on his business card. InvestmentNews Content Strategy Studio recently spoke with Mr. Garman, exploring how client acquisition and retention issues were resolved, and how Schwab Advisor Services™ supported him and his firm through the transition and afterward.

InvestmentNews: Was there a particular moment when you knew you would go independent?

DON GARMAN: My wife and I had discussed independence for several days, and one of the things I said in our conversation was that going independent was the smart thing to do because it's right for clients. A few days later, she asked me a really key question: "What would you do if you weren't afraid?” I hadn't thought about it that way, but her question hit the core issue. Was I afraid that my clients wouldn't follow me because maybe I wasn't really as smart or as good as I thought I was? Or was I afraid of the challenge? My wife's honesty crystallized my thoughts, and made me realize that I really did want the challenge, even if it meant that some number of my clients might not come along.

InvestmentNews: Now that you're in your fifth year, were those fears justified?

DON GARMAN: The short answer is no. Pretty much all my clients moved with me, which I found kind of amazing, since I had lost some clients when I moved from one wirehouse to another earlier in my career. On top of that, our business has grown probably four times faster than it would have had I stayed — and I know that from having been with big firms for two decades.

You have to remember where I was coming from. Like many wirehouse advisors, I was under the impression that going independent meant you couldn't provide all the things your clients have gotten used to, either because you wouldn't be able to afford doing so or because the services couldn't be replicated. But that's simply not true. Now I am able to provide all the services a wirehouse provides — and more. The reality is that using Schwab as our custodian has provided our firm and our clients with everything we need. And in terms of technological capabilities and access, it's been a huge upgrade.

InvestmentNews: Let's go back to your firm's growth. To what do you attribute that?

DON GARMAN: There are several factors, but an important one, which I learned only after I went independent, is that there were many people who would not do business with me because I was at a wirehouse. There were local prospects I had been chasing for 15 years who wouldn't give me the time of day, who actually called me after we had been in business for a while and said they wanted to talk. The second reason for our growth is that I was finally able to realize my vision and seize an opportunity that wirehouses don't permit. Specifically, they restricted how my clients could invest in some of the companies these clients are familiar with from living and working in our community, the Tri-Valley, which could well become the next Silicon Valley. When I started my firm, I hired a director of research who specializes in tech to analyze these opportunities — something I could never do before. Now I can better serve my clients and also enhance our firm's potential for growth.

InvestmentNews: How did Schwab help you during your transition to independence and what value do you continue to receive?

DON GARMAN:The support we got from minute one was top-notch. The Schwab team that came to our office to help with the onboarding was great and didn't cut any corners. Sure, getting up and running while repapering accounts is a lot of work, but the process went very smoothly.

The ongoing support has been just as high-quality. Now that I have relationships with people at Schwab, I know who to call to help me think through difficult problems. They are truly interested in helping us grow. If I need advice on a technology solution, for instance, they cut through the confusion and suggest some possibilities they know could be right for our firm. I couldn't be more pleased by the width and depth of the support and by the quality of the Schwab people.

InvestmentNews: What about support and assistance beyond that in the operations area?

DON GARMAN: Another one of the misconceptions I had when I was an employee advisor is that you're all alone when you go independent. That's a myth, too, because I've developed valuable relationships with other advisors served by Schwab at the many conferences and meetings the firm conducts, where we learn about the latest tax law changes, market shifts, and regulatory developments, as well as hear from leading money managers. I've found independent advisors to be very generous about sharing ideas with each other, so I've never felt that I'm in this all on my own.

On the investment side, Schwab provides access to research and has a sophisticated trading operation. More importantly, clients appreciate the honesty and ease of doing business through Schwab, online or any other way they want access. And the fact that we are associated with a brand that's all about providing a better value proposition for the client reflects positively on our firm.

In talking to former wirehouse advisors who've gone independent, I discovered we all ask ourselves the same question: “Why didn't I do this earlier?”

To find out what going independent could mean for you, visit advisorservices.schwab.com/goindependent

Schwab does not supervise investment advisors and takes no responsibility to monitor the services they provide. Schwab Advisor Services™ includes the custody, trading, and support services of Charles Schwab & Co. (Member SIPC) (www.sipc.org). (0819-9E2X) This is a sponsored special feature developed by the InvestmentNews Content Strategy Studio and supported by Charles Schwab.

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