Big Chicago advisory firm exits Raymond James; forms its own RIA with Pershing
After a dozen years with the big broker-dealer, the group saw advantages to using NetX360 and working with Mark Tibergien
7 min read- Financial Strategy Network exits Raymond James, launching its own RIA with Pershing.
- Lower costs and better technology drove the $550M firm's move to Pershing.
- Raymond James acknowledges the departure, citing the firm's shift to fee-only.
- Pershing's technology and CEO Mark Tibergien's influence attracted Financial Strategy Network.
Financial Strategy Network LLC is abandoning its broker-dealer relationship with Raymond James in lieu of operating an RIA that will custody assets with Pershing Advisor Solutions.
The Chicago-based advisory firm with $550 million in assets, has its own RIA but operated under Raymond James broker-dealer model for the past 12 years.
When Financial Strategy Network began to evaluate its business, seeking to make changes, Jim Weil, one of four partners with the firm, says the technology was better and costs lower at Pershing Advisor Solutions than at Raymond James.
“We could have custodied at Raymond James,” says Weil. “But we’re building an enterprise and we wanted to look more businesslike. The economics and technology at a pure custodian were just more favorable.”
Founded in 1992, Financial Strategy Network caters to entrepreneurs, senior executives and retirees whose average net worth ranges from $3 million to $5 million. The company has 500 clients and 20 employees. In the past 10 years, this Windy City firm has seen its assets more than double.
Its founders are Weil, 44; Craig Richart, 62; Jeff Toner, 49; and Steve Merdinger, 53.
Why leave Raymond James?
Weil says his firm has had an RIA for the past 12 years, but over time the company became 95% fee-based and was no longer using many of the services and features provided by the big St. Petersburg, Fla.-based broker-dealer.
Jeff Toner helped found the firm
in 1992.
The partners were happy at Raymond James and even notified the company in the early summer months that they were evaluating their relationship and might be making changes. The advisors spent months evaluating a number of firms.
This week, his company is in the process of transferring accounts from Raymond James to Pershing.
“We really want to be respectful of the relationship we have with Raymond James,” Weil says. “There was no straw that broke the camel’s back; there was no dirty secret. It was a matter of trying to be good business people and just periodically evaluating the best way to serve clients.”
Mark Tibergien is making Pershing an industrial strength custodian with an RIA service touch
Raymond James reacts
For its part, leaders at Raymond James were disappointed to see FSN leave the company, says Jim Fulp, managing director of the independent contractor division for national sales and supervision of Raymond James Financial Services. He says the transfer of FSN’s clients’ accounts is underway and the company expects client assets to be moved within a week or two.
“We certainly would have preferred to have the FSN team remain affiliated with RJFS,” Fulp says. “We continue to have a significant number of independent branch managers who own and operate their own RIA company under our investment advisors division. “While we regret their departure, if they should ever want to once more establish a relationship with Raymond James, we would welcome them back.”
He added that Raymond James has had a number of independent professionals who have been successful in building an independent fee-based practice. He says over the years as the industry has changed, a few individuals have elected to transition to a fee-only RIA business model and no longer maintain their FINRA registration through Raymond James.
“However, we have far more new independent branch offices established each year than we see these situations arise as with Financial Strategies Network,” he says.
Pershing prevails
As FSN was searing for a custodian, Weil says Schwab Advisor Services and TD Ameritrade were very much in the running but they liked Pershing Advisor Solutions the best because of CEO Mark Tibergien’s hands-on approach and the company’s technology offering – See: Nevin looks under the NetX360 hood after it gets 100,000 new users and some overhauling.!
Craig Richart is part of the
foursome.
Story Timeline
“We looked pretty hard at Schwab and Ameritrade,” Weil says. “We really like their technology and we think Mark Tibergien has had a lot of influence on their culture,” he says. See: Tibergien uses brutal honesty to captivate big Schwab RIAs and others at San Francisco event.
Some years ago, FSN had hired Moss Adams for a consulting project when Tibergien was still with that firm. and the advisors were comfortable with Tibergien’s process and style.
FSN is an example of the type of RIA that is attracted to Jersey City, N.J.-based Pershing, Tibergien said in an e-mail. He says the RIA is professionally managed and is a growth-oriented advisory firm.
Tibergien said he liked the in-depth approach FSN took to decide on a custodian. He added that FSN advisors compared Pershing carefully with other custodians in terms of technology, product innovation, client-service experience and practice management.
A few things I learned about the Raymond James RIA effort in an NYC sit-down with Bill Van Law
“They were very deliberate,” Tibergien says. “Our competitors are formidable so we’re pleased that FSN was able to see a clear difference after a very rigorous vetting process. And we’re excited about working with a team of individuals who we enjoy and respect as advisors and business people.” For advisors who offered similar thoughts on Pershing, see: Two senior UBS brokers pass on retirement to pursue aggressive breakaway plan.
Switching CRMs
When advisors began shopping for a custodian, Weil says it became crystal clear that there are many top-notch technology options available to them.
The company will be using Albridge Solutions for reporting technology. Right now, they use GoldMine for CRM but in the next year intend to change to Junxure. See: Junxure moving to the cloud amid market pressures.
“We would have moved CRM sooner but we decided to put the custodian change first,” he says.
Becoming a firm
In the late 1980s and early 1990s, the four advisors worked together at Insurance company Cigna’s small advisory unit. When they formed their own office, each advisor was independent.
“We started out almost like doctors sharing an office space and then we formed an entity and grew it into a business over time,” Weil says.
Over the years, the advisors learned they could build the practice more efficiently and effectively by working as one business unit with the same goals and objectives.
“One of the big things we’ve done is operate as a firm rather than a bunch of individual advisors,” he says. “It causes you to think differently.”
Piece by piece
In addition to the partners, the firm also has four other advisors and has crafted a strategic office where staffers and professional executives are working as a team.
Now, the firm specializes in catering to high net worth individuals with complex planning issues. “The more complex the better,” he says.
FSN’s clients are aware of the advisory firm’s move and are supportive, according to Weil. “We’ve been fortunate to have strong client support,” he says. “It’s a ton of work. You have to move all of the accounts piece by piece.”
Golf helps with referrals
Weil says one of the best ways his firm has bolstered assets and clients is through client referrals. Each summer, he plans about four of five golf outings with clients and prospects. He says he’s able to learn a great deal about clients and referrals while golfing with them.
“Our clients are a lot of fun to hang out with,” he says. “I’ll get referrals from a golf outing.”
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