Too Good to Be True?
I graduated college a year ago. Every since then, I have been working as an RIA at a boutique firm. I really do enjoy it, sometimes. However, my boss is 63 and plans to retire in 5-7 years. During development and office management, he always comments that the long term plans/decisions are more fr me to make, as it will benefit me over him. He also has made the comment about me taking over when he retires. (His AUM is $50M)
I have been working super hard to get my name out in our small city. I joined the symphony board, rotary, and tried to get coffee/lunch with everyone in my LinkedIn contacts. However, I feel I have had some problems bringing clients in like he would like (usually it is teachers or nurses, not lawyers or doctors), but I have some big leads in local businesses. He has never said anything, but just a feeling.
My question is: Is this too good to be true? Am I being too naive?
Only if you get in your own way.
Start by talking to him, understanding his vision for the book and, importantly, how you can put yourself in a position to take the book over from him. What skills do you need, how do you start building the trust that he has in his client base, etc. Then start acquiring those skills.
I need to re-emphasize this - talk to him. You should never start trying to 'read your bosses mind' when it comes to feedback and your development. You can't. It's not fair to you and it doesn't matter what you think he thinks - only what he really does. Open up the lines of communications, get some feedback and start going from there.
This is, of course, assuming you actually want to take over from him - which is a much different question.
Well, he already has me talking to his C and D list clients about their portfolios. They like me quite a bit. I do want to take over.
Then I think the big question - and/or conversation - is how to improve on the business development side and growing the book. That's a good position to be in.
sounds great. what is your relationship with him? if it’s less than a year, I wouldn’t plan my life around this. it’s a call option. if he trusted you in less than a year to manage $50mm he can do the opposite just as fast. good chance this is BS for some reason but would need more color on the relationship
Few counter points to the above.. Advisor is currently 63.. 5-7 years means 7+ years which puts him at 70+... average client age probably in the 65-80 window which is old. Very old for this business. You'll have to buy him out.. and I'm not sure buying clients this close to deaths door would have much upside. Not to mention, $50M isn't a ton in the FA world..
Run with it.. see where it goes.. but I would also do some searching.. probably wouldn't be too challenging to find another independent advisor closeish to retirement but with a bigger book.
Very true. As mentioned above, I am working on obtaining businesses in the area. We do have predominately older clients, but we also manage a few 401(K) Plans for medium sized businesses. There is also a Morgan Stanley manager in contact with us to join our practice- she is 40 ish.
Plus, as much as he has mentored me and took me under his wing, I think it would be extremely sleazy to leave once I am more established.
Not sleazy at all to leave. Do you have anything in writing saying you will get x% of the book at a specific multiple by a certain date? No, you don't. You're a cog in his system that helps him get the busy work done right now so he has more time to himself. If he's bringing on a 40 year old advisor, I'm going to assume she will acquire most of the clients that are worth it, leaving you with shit.
I'm not trying to rain on your parade. Additionally, I may be jaded after interning and working in the industry at both wirehouses and independent firms. But, I have a decent grip of this environment and would advise you to not be complacent and continue to strive for something better.
couple questions
a $50mm book is good, but not great. with some hustle and some good luck, you can get that AUM yourself in 4-5 years (I know, I've done it). I would worry about the following.
if his clients skew older (without good relts with the next gen or a lot of younger clients who will become rich), you're captaining a sinking ship. unless you knock it out of the park investment wise, that $50mm will be $30mm in less than 10y.
if his clients are mostly smaller, there's a cap to your growth. if he has a bunch of relationships with PWM, you need to be doing more than just helping someone coast. my fear for you (as it is for anyone who asks me this question) is that you'll end up paying this guy out over a few years and find yourself in 5 years with a book that's dying, dwindling, a compliance nightmare, and with little/no growth. you'd be better off getting some experience, and if he doesn't change his ways, see if you can start up at merrill/morgan/ubs, bring some of the clients over, align with a promising team, and get after it.
happy to answer follow up questions
Are you sure that you're not being generous here? Even at 1%, $50M only comes to $500k of gross income. We know the guy has a subordinate taking at least 10% of that, then we need to account for recordkeeping, compliance, office space, etc. I'd guess he takes home less than $200k/yr. Our wholesalers would only meet this sort of client if they were part of a larger office where they could grind out a dozen meetings in an afternoon.
I am being generous. I have a suspicion that it's not a great business he's looking to take over, but until he answers my questions, I have to give him the benefit of the doubt.
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