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The ex-Wells Fargo team chose the name Kimball Creek to highlight its Northwestern roots -- but it's also a metaphor for the high the stakes their clients face
August 27, 2013 — 1:28 PM UTC by Karl Thunemann
Brooke’s Note: Washington Wealth is a breakaway landing pad that’s distinguished itself by emphasizing branch managers and by switching over to LPL’s hybrid program. How is that plan working out? Its latest assets come from the Seattle area, where our Karl Thunemann lives. He looked into it and came back with this report. See: LPL Financial tells its faithful in San Diego that a fuller-service, more dependent model will get corporate support.
Dean Bennion, 52, and Mike Vincent, 43, formed a formal partnership in 2004, working together as financial advisors at Wachovia/Wells Fargo Advisors. But their ties go back even further. In 1995, discovering that they shared a common philosophy and approach to their work, they began covering for each other and exploring new ideas together.
Now, they’ve left Wells Fargo Advisors LLC and struck out on their own as Kimball Creek Partners, based in Bellevue, Wash., with a projected $220 million under management. Well, not entirely on their own: Kimball Creek is an affiliate of San Diego-based Washington Wealth Management LLC, a registered investment advisor with 10 operations scattered across six states. See: Former MSSB exec powers up Washington Wealth Management as branch-manager franchise.
They departed Wells Fargo in July and Kimball Creek is in its new digs— not in one of the high-rise office buildings that have come to distinguish downtown Bellevue as it has grown, but in a modest single-story building that dates from 1946. It is a very long stone’s throw from Lake Washington, just the spot for a new, up-and-coming business. Kimball Creek shares office space with another Washington Wealth unit, Overlake Partners, and its principal, John Wilbourne — another veteran of Wells Fargo Advisers.
Each operation is completely independent, says Washington Wealth CEO Rob Bartenstein, who joined the company in 2011. Washington Wealth is a hybrid, and recently formed a relationship with LPL to manage commission-related brokerage business — at the same time retaining connections with Fidelity, TD Ameritrade, Pershing and Schwab. See: Seeing a clear path to $3 billion, Washington Wealth hitches its venture to LPL but quietly adds Schwab.
More than halfway to a billion
Technically, Kimball Creek is an investment advisor representative, but it is wholly owned by Bennion and Vincent. Bennion says he racked up experience as a branch manager for Wachovia, which enabled him to study best practices beyond his own office. Bennion and Vincent are the only two advisors in the practice and are both CFPs, as is their office manager, Sabrina Seward. Without adding new advisors, they hope to grow by 15% annually.
With Kimball Creek, Washington Wealth now has offices in Seattle; Los Angeles; San Diego; Orange County, Calif.; Las Vegas; Chicago; Middleburg, Va.; and Westport, Conn. Its latest ADV filing with the SEC put assets under management at $561 million. Bartenstein says the company is in the process of filing a new ADV.
Vincent says he and Bennion looked at a lot of different platforms that would enable them to be part of a hybrid RIA, and that Washington Wealth’s commitment to attending to minutiae sold them over the others. See: LPL Financial tells its faithful in San Diego that a fuller-service, more dependent model will get corporate support.
Asked to name his chief competitors, Bartenstein did not offer a list of other RIAs, but pointed to the wirehouses — while giving them their due. These are not “boiler rooms,” he says, but home to “plenty of extremely talented people … who have worked their entire careers believing they were operating in their clients’ best interests.” In moving to a hybrid RIA, he said, they find “there are no brackets around their situation … they can fully spread their wings.” Breakaway advisers, within five or six years of independence, find “you really own something of value. It’s a natural evolution,” he says. See: With LPL as its new BFF, CONCERT seeks bigger game and more RIAs.
Washington Wealth specializes in helping breakaway advisors—and teams of advisors—set up operations that meet regulatory requirements, comply with the broker protocol where it applies, and deal with the scores of details involved in creating a smooth-running financial advisory office.
Though there are scores of offices of supervisory jurisdiction — big RIAs that serve as reps of reps — Washington Wealth set out to distinguish itself by seeding each office with a formerly successful wirehouse branch manager. The idea was that Wall Street firms had dumped some great talent and connections onto the street after the shock of 2008 and 2009 in an ill-advised rush to cut costs at brokerage branches. Washington Wealth’s theory was that those managers — properly incentivized — could provide the sense of managerial order needed for otherwise uncertain breakaways — and prove effective recruiters in a local market into the bargain. See: Revenge of the branch managers: Washington Wealth is rapidly putting ex-wirehouse workers in play nationwide.
'Can’t afford to get it wrong’
As Bennion and Vincent begin their new venture, they will necessarily have to feel their way on some aspects of the practice. Some obvious questions have no clear answers. For instance, how will the split between commission and fee business shake out? Bartenstein says it depends entirely on the decisions made by individual advisors. Bennion and Vincent frame it a little differently: With each client, they decide how to use each tool. For assets where there is not much turnover, Bennion says, it’s more effective to place them on the brokerage side. But fees are better in cases where there’s a lot of turnover. See: Pershing warns IBDs to embrace hybrid business model or risk being marginalized.
As far as division of labor, “Mike will have to work harder than I do,” Bennion quips. But seriously, they will split their duties by client, not task. But they also want clients to feel free to contact either of them, assured they will get the same answers.
And the stakes are high. Bennion says their clients are close enough to retirement to have reached the point “where they can’t afford to get it wrong.” Most clients have assets in the range of $1 million to $10 million.
The hardest part of the jump to independence was keeping their clients in the dark about their plans, Bennion says. “It’s important to maintain integrity and follow the Broker Protocol to the letter. But these are not just our clients—they’re our friends.” See: Which firms are joining the Broker Protocol, and how your firm gets on the list.
Last exit before the cascade
Kimball Creek, the stream after which the firm is named, is in the foothills of the Cascade Range, about 23 miles east of their Bellevue office. It’s near where Vincent owns five acres upon which he and his wife raise Longhorn cattle and Bennion, who owns 10 acres nearby. The modesty of the creek and the area suit their clients, Bennion says, describing them as family-focused and free of pretense. See: Ken Fisher keeps expanding his $42 billion RIA empire despite UHNW head winds.
Kimball Creek is the last tributary to flow into the Snoqualmie River before hitting Snoqualmie Falls, the spectacular 270-foot cascade and a popular tourist destination.
In effect, Bennion says, the name Kimball Creek underscores the fact that it’s too late in the game to get it wrong with their clients’ investments. See: An X-ray of one affluent, educated and sophisticated investor’s portfolio shows how it was chewed up by fees.
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