Streettalk Advisors aims to hit $1 Billion in AUM as it develops 50 more markets

Name: Lance Roberts, CEO and general partner, Streettalk Advisors

Location: Houston, Texas

Years in financial services: 23

If the name Streettalk Advisors sounds a little like a radio show, there’s a good reason for it. The firm did indeed grow out of a radio show, based in Houston and hosted by Lance Roberts and his business partner, Michael Smith. Then running a broker-dealer firm, Roberts dispensed investing advice of all sorts on the show. When one caller seemed especially baffled by his situation, Roberts told him to come to the station to chat in person. The next morning when he arrived for work, Roberts found 80 investors waiting for him. Nine years and $400 million of AUM later, Roberts clearly loves his advisory career, but still considers it to be something of an accident.

You followed a long and winding road into the advisory business—starting with martial arts! Tell us about it.

I started in martial arts when I was around 10. In college—Texas State University—I ran my own chain of martial arts schools and was on the U.S. National Martial Arts team, competing overseas in full-contact martial arts.

After graduating college, I went to work in banking in Austin, and the bank that I worked at was acquired by North Carolina National Bank, which later became Bank of America.

When the bank was acquired, I raised capital to start and build a 13,000-square-foot fitness and training facility. Mind you this is in 1989, during the whole S&L crisis, and there is quite a story about raising capital during that period. But at the ripe old age of 24, I raised about $1.4 million to build a state-of-the-art facility that housed both individual and corporate clients.

After that project, I went overseas to continue in investment banking, working with a couple of banking contacts that I had formed during my martial arts competition days, to start raising capital for high-net-worth clients for business ventures, real estate transactions, offshore banking and investments. During my stint living overseas, I eventually met up with two bankers from France who were primarily running investment-banking operations out of Monaco. They did not have reach into the U.S., so I returned to the U.S. and started an institutional broker-dealer in 1998 to manage investments and operations for the partnership.

In 2000—as the market began the technology bust, I stumbled across a small radio station in Houston that was starting up a business-only program. I started broadcasting (what I call) “the truth about money” on Streettalk with Lance Roberts, from 4 to 7 p.m. Monday through Friday. In 2001, Mike Smith, who was working with me at the broker-dealer, and I left to begin managing money for individual clients, which ultimately led us to form Streettalk Advisors, LLC. in 2004.

What’s your growth strategy for Streettalk Advisors?

We’re starting to syndicate the radio show on a national basis; I’ve come up with a model where I can service customers in multiple cities.

Our AUM are $400 million, and five years from now my target would be a billion dollars of AUM. My goal is that each and every year we raise $50 million in new assets in Houston. So in two cities, that would be $100 million a year, in three cities $150 million a year and so on.

We’ll go into a market and find a radio station to start simulcasting or broadcasting on—we never sell a product on radio, not even ourselves: It’s strictly informational. We build trust as a first step, through the radio, over time. As we start getting enough input from people in, say, Austin, we will find a small RIA in that town that has a small book of business or is looking to expand the business. We’ll acquire them or work with them to begin directing people in Austin to that office. We’re in the process of locating potential stations, and are looking in the top 50 markets.

What is your biggest practice management challenge right now?

Technology. We’re very technology-driven, and we’re going through a big migration integrating a variety of technologies to provide better client service and communication. We use PortfolioCenter from Schwab Advisor Services, SalesForce, Tamarac, Capital IQ, and Zacks; our web site is directly integrated into SalesForce using PHP and Drupal; Datavox for telephone integration; and NetDocs is integrated into SalesForce.

From a client portal so our customers can come in and view their accounts and assets online; we can also share interactively via Internet communication through video, audio and financial blogs. The other big tech challenge is integration of our portfolio management system and the trading system. There is a real lack of compatibility in the industry as a whole—I’m really surprised that there is not a more simple procedure for taking a transaction from a model and executing it through a series of portfolios electronically out onto the exchanges and have the trades completed and allocated back into clients’ portfolios in a seamless fashion.

Who are your target clients?

When you think about the number of Americans with more than $25 million, it wouldn’t be that big of a basket. Those with $1 million to $5 million, on the other hand, that’s a huge basket. There are a lot of people in that category, but they’re overlooked because everyone is out chasing that high-net-worth client: They want the whale. Our sweet spot is $500,000 to $5 million, that very under-served market.

We have special models we manage for certain asset brackets; from small investors with less than $150,000 … to clients with (net worths of $1 million to $5 million. At that level we bring a lot of those alternative-type structures that are used in the $25 million range down to that $1 million-to $5-million level.

What was your best day as an advisor?

The one thing you don’t get in this business is people calling up and saying thank you. People call all the time to complain—you didn’t get the trade right, you charged too much for something. But about four years ago, I had client call me up simply to say thank you for taking such good care of me. Both of her sons had committed suicide, and she has a very small account. She was literally in tears when she called up.

And your worst?

My worst days have always been more regulatory in nature—like when the SEC calls and says it’s time for your annual audit (laughs).

Editor’s note: A previous version of this story suggested incorrectly in the headline that Streettalk already hit $1 billion of assets under management.