How To Go Independent

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Gerald Robinson -- A Career-changer financial advisor's path to independence

InterviewsSean KernanComment

Below is an edited transcript of an interview with Gerald Robinson, a colleague of ours here in the Dallas - Fort Worth area. You can listen to the interview on the Episode 16 page by clicking HERE


Gerald had a long and distinguished career at the Kroger company, ending up as the district manager at the end of his time there when he finally decided it was time to try something different. After the stresses of holiday time and retail, the general restructuring, downsizings, and uprisings that can happen in large organizations. he decided being a financial advisor would be a good way to give himself more control, and flexibility of his time.

As you’ll hear this episode, he joined a large firm, and ended up changing to another large firm before making the leap to independence. I hope you enjoy it, and for anybody that is at a wirehouse right now, and is concerned about maybe doing a little later in life (maybe closer to retirement than to college graduation), Gerald’s story is a great one to show that you can pull this off, if you have the right mindset, and the right approach. I think he’s finding it’s a great fit, in terms of nearing what might be a typical retirement age for some people. He’s trying to continue growing the business, partner up with people, and build a team.

So without further ado, here is the interview with Gerald.

Sean: Today I’m talking to Gerald Robinson, my business partner, long-time financial advisor, CFP, and former retail grocery executive. Before we jump right in, Gerald, tell us a little bit of your background, and what you did before becoming an advisor, and if you want, you can roll right into how you ended up getting in the business.

Gerald: I graduated college, and my degree was in financial statistics. I continued to work for Carter after I graduated and spent 28 years working with Carter as the district manager. In late ‘98 we had one of those restructurings, I decided to get out of retail and go back to my roots in financial services and began my financial service crew in 1999.

Sean: What joined you into the industry? What made you choose that? 

Gerald: Well, retail had been a very demanding business, and I decided I wanted to go into a business that I had some control over my own schedule, and some control over my ability to be involved in the community, which I’ve since been very heavily involved, and currently heavily involved with Rotary International. 

Sean: Very good. And tell us a little bit about how you ended up in the industry, what firm, and sort of the path up until you started to look at the independent space.

Gerald: Well, I hired in with a company called Paine-Webber, after looking at a number of companies, because the manager took a personal interest in me, and I thought I would get the best training there. After going to New York, New Jersey, doing all my training, and getting back, naturally, the manager got fired after about four months. I was at Paine Webber, which got bought by UBS, for two years, and we had five different managers during that time.

They were very broker-oriented at the time, even though they had just started their free-based business. In fact, by the time I left, after two years, I was the number one free-based person in there. The manager of the Merrill Lynch office got hold of me in 2002, and I moved over to Merrill Lynch. At that time Jeff Markham, he’s still the regional manager with Merrill, good guy.

I thought that would be my final move. I began working on my CFP, building my practice, and things were rolling along at mother Merrill, up until about 2007, when it became apparent that problems with Merrill, that I don’t think were just Merrill’s alone, I think they were wirehouse-wide, began to surface, regarding a number of issues, auction rate preferreds, and especially the involvement with the subprime mortgage mess.

About 2007, I’d made the decision that I was going to begin to look at other alternatives. As I looked around, even though I could go to Morgan Stanley or several other places, other wire houses, I decided the independent route was the best place, and began to make those decisions going into 2008. I was still completing my final courses for my CFP.

In 2008, I realized that I was definitely leaving then. I’d already made the decision to leave, but unfortunately, I was completing my final courses for my CFP, and I knew I could not transition my business, and study, and take the CFP exams. So, I did that March 21st, and 22nd of 2009, and the very next week I went independent with LPL.

Sean: Do you remember the time when you kind of made those final decisions? Sounds like really gradual, but in terms of the “Hey I’m definitely leaving”, do you remember how long before you got to the trigger point, and making the move?

Gerald: Well, I guess there were a number of catalysts. Number one was being tired of the wirehouse-driven mentality. The second one thing was Merrill was trying to create these large, corner office, partnership-type deals where they wanted people to become salaried, and they take over their book, and because of the way Merrill was structured, they could make a lot more money doing that, and then pay me more than I was making then, but I thought that was pretty stupid.

Sean: And why do you think that?

Gerald: Well, because it was my relationships, my clients. I’ve build my entire time, ten years of building these relationships. Why would I want to give that up to somebody else, just so I can make a little bit more money?

Sean: So, you mean like double the money? Or like 2% more? Or 4% more. 

Gerald: Probably, you know, 15% to 20% more than I was making then. But, by then I’d already began to explore the independent options of what I was going be making, versus what I was making. I already came to the realization that if I only move 50% of my book I was going to be making more money than I was making with Merrill. So, it was an easy decision to tell them “Thanks, but no thanks.”

Sean: Yeah, it’s amazing what the economics look like when you really dig into them. Do you know how many different options you seriously considered in terms of independent firms?

Gerald: I looked at four overall independent firms, and two very seriously, to the point of actually interviewing advisors that were associated with those particular firms.

Sean: And, when you got to those last two, did you feel like either would be good option, or did one seem like a better fit than the other? What kind of criteria did you use to get down to that final decision?

Gerald: I thought either, or would end up being a decent option, but one firm just stood out above the rest, as far as I’m concerned, and every communication I had with them, in fact I guess one of the advisors I talked with had worked for both firms, and she kind of convinced me that the firm that I was most seriously considering at going independent with was by far the best one. I’m still with that firm.

Sean: Very good. So that would’ve been early in 2009 you said?

Gerald: Yes.

Sean: Then when you made that move, I know it’s a hectic time, what was your retention like? How many clients came over? Tell us a little bit about that process and how you ended up business-wise.

Gerald: The move was a little bit challenging because I was a solo OSJ office at the time. I had taken my series 24, and was my own branch manager. I didn’t have a lot of staff, and because of all the paperwork involvement, it was a challenge, so I worked a lot of hours. That’s just part of what was there, but I was very, very happy that I was able to retain 90% of my book, so naturally, I started off making more money as an independent than I’ve ever made working in the wirehouse.

Sean: That’s awesome. That’s great to hear. And you’re already advisory-focused from the very beginning, correct?

Gerald: Yes, my book was very advisory-oriented. It’s always been in the 90% range, and currently at 96% advisory.

Sean: If you don’t mind sharing, about the rest of your profile/business, in terms of types of clients, your investment approach…do you have any particular niche you focused on? Tell us a little bit of how you do things.

Gerald: I guess I have a great cross-section of clients currently. It didn’t start out the way. I started out with a lot of age fifty to sixty pre-retiree group – mostly because of the rollovers. That’s how the larger part of my book was built. I’m very financial planning-focused, and after you’ve been in this business for a while - now for me, that’s seventeen years - if you’re doing your clients right, from a financial planning perspective, then you become a generational financial planner, and so my book evolved up to helping, or assisting with some parents, and then assisting with kids, and then now even grandkids that have begun to build. So, it’s a good cross section. From investment perspective, I moved into an advisory channel where I make the decisions, and do the research regarding which mutual funds, and individual equities, and ETFs, and those types of things that I used, and I have a process that I’ve implemented over the course of my career that I utilize to do that. I’m not a buy-and-holder. I consider myself to be a strategic asset allocator.

Sean: Very good. Then another one of the benefits I see from being independent are all the options available and how they set things up. How’d you decide to go about setting up an office?

Gerald: Well, at first, when I looked at being independent, I looked at offices, and coming out of the wirehouse, you’re used to the staff, and the office, and going there every day, and doing all that kind of stuff. I was a pretty disciplined and focused person, so I had no problem in looking at that, and I looked at the options of getting an office, like some Edward Jones people had, or working with some other independent advisors within a conjunction of their particular office. After looking at the financial requirements for doing that, I decided to go ahead and just office out of my own home, and I’ve utilized that ever since because almost all my clients wanted to meet at either their home, or lunch or dinner somewhere else, and that’s where I do my reviews, my financial plan updates, and such.

Sean: Very good. Did you find any challenges or issues in setting up that way? Any pushback, or unease from anyone, any prospects, or clients that you’ve noticed?

Gerald: No, not really. I haven’t had much pushback at all since I started that, and since now I’ve developed into a team, we utilize the resources available to us. We have conference rooms that we can rent by the hour, and I can use the Chamber conference room because I’m with the Chamber, and other things that are available to me, if I so choose to use them. Rarely do we do that, but sometimes, if you’re trying to meet with an entire family, and they don't want to do it at their home, it does offer that particular option available to us.

Sean: Yeah, I think eventually we all find that we can get the resources when we need them sort-of on demand, instead of paying for them 24/7, which is a nice benefit. If you think about how many times you’re actually meeting with someone, who’s going to care where you meet it’s kind of minority, right?

Gerald: You know, when I was looking at my independent business model, as I began to look at it, I was being compensated significantly greater than I had been in the wirehouse, but I also had responsibility for everything that the wirehouse used to provide, and coming out of retail, I’m a very cost-conscious person as far as overhead costs and concerns, so I wanted to look at options that provided me the ability to be able to provide for my clients for every need that they had, but doing in a fashion that made economic sense to me, so that I wasn't just burning myself with a lot of overhead.

Sean: Yeah, I think it makes sense. A lot of us are prone to, like you said, replicate what they already had, without thinking “Do I need that?” Didn’t you drive all the way down to Fort Worth from, you live in the same place, right?

Gerald: Yeah, I lived up north of Fort Worth, and I drove to Fort Worth every day of the week while I was at Merrill, and then my manager began to let me, because of my involvement in the community, spend two days a week actually working out of my own home.

Sean: Okay, I didn’t know that.

Gerald: Yeah. That gave me a little bit of better feeling about being able to start from there.

Sean: Okay, so you weren’t going cold. That’s interesting. I think no one with their right mind would consider, I don’t think, setting up a new office for your independent practice downtown, and driving all that way, but lot of other ways I think we tend to do that. What about staffing and other resources that you find are kind of critical in your business, or tell us about the evolution of your business in terms of/in regards to your staff. 

Gerald: Well, since I’m not a young whippersnapper, finding staff has been a significant challenge for me. As my book continued to grow, I reached out, and found some part-time administrative people to help me with that, but I was constantly on the lookout for partners. In fact, I joined an IRA with the sole purpose of helping provide me some local support, but also helping me find the teaming up capability so if I was in Kenya, or Uganda, or Costa Rica, my clients could be taken care of. That happened in about late 2012, that I made a move from being a solo OSJ to a hybrid RIA model.

Sean: Did that have much impact on your day-to-day doing business?

Gerald: Really, it had significant impact on me, because I think because it gave me the capability of feeling that degree of comfort that there was a local source there available to me, and the structure of the hybrid RIA was a little bit different in my independent provider, in that I was able to household accounts easier in a fee-based manner, and a number of other things that worked, especially if you're doing generational planning. You know, if you’re sitting there, and you’ve got some kids, or grandkids that you’re trying to do some things with, you can bring that into the household, at overall the same fee that you’ve been utilizing, without having to worry about minimum account size. I think that’s significant advantage the hybrid offered me..

Sean: Great. I wasn’t necessarily trying to set you up to have you promote us, but from a day-to-day, in terms of how you did things, you were kind of doing the same thing, right?

Gerald: Yeah, basically. It alleviated some of the compliance responsibilities for me, which was good. I was no longer the solo OSJ, I had an OSJ that I worked with, so I didn’t have to worry significantly about that, so I could focus more on client relationships, and building my book.

Sean: I think there’s a lot of different network options, in terms of plugging-in to some sort of infrastructure, but I think a lot of us get nervous, me included, that you would lose some sort of flexibility, or freedom, or independence. The more I investigated, not just with what we do, but what a lot of other people do, that’s definitely not the case. I think that’s something that I would encourage anyone that’s thinking about the move you made from a wirehouse. There’s a lot of good options to get service providers, basically, and it takes a lot off your plate for a small cut, would you kind of agree with that?

Gerald: Yeah, I think I totally agree with that. I was sitting there, trying to find partners, and I went and talked to the recruiter for the independent firm that I ended up using as my broker-dealer, that helped bring me over, and he explained to me that no one does that anymore. It comes out as a solo OSJ trying to run a solo practice, because it just doesn't make economic sense for them, or for their firm, and I looked at the hybrid route, and it’s been a very good move on my part to do that.

Sean: Great. Anything else about running the business that you’ve found, either in the old arrangement, or now with the new infrastructure you’ve added, in terms of what takes you away from what many advisors think of as their core competency - working with clients? The reason I ask is, I hear a common concern of “I don't want to run a business.” I always think, turning a computer on is not that hard, or setting up a phone system, but it’s the unknown. So, any comments on how much time and energy you’ve spent over the years on those sort of things, that are not core to our financial planning?

Gerald: Being independent, being a sole practitioner, I found I had to run my own business, and so I had all the  complications, with nobody to bounce ideas off. Now that I’m part of a team concept, it’s worked out where my partner and I discuss all the elements of the team, and who’s on the team. In fact, it makes it much easier. Again, I came from professional management background, so I think I offer insight into some things that can happen, but I certainly value the team, and the insights I get from everybody else, and it’s given me more freedom to be able to pursue the things both professionally, and in the community that I want to be able to do.

Sean: Great. That’s what most people are experiencing, and the big thing we hear, especially from advisors who’ve done this their whole career, is “we wish we would have done this sooner, or I wish I would have done this sooner” type of thing. Do you have any costs or big-time issues,  if you were talking to yourself say, seven years ago now? I guess it’s your anniversary, right? When did you come over? Do you remember what day?

Gerald: Yeah, March 30th is the day that I went independent, of 2009. 

Sean: Isn’t that today? As a matter of fact, it is, happy anniversary!

Gerald: Seven years as an independent, and seventeen years in the business. If had to look back, and change anything regarding my career and what’s happened, I probably would've left retail five years earlier. My timing wasn’t great, as far as market conditions, and everything else. I would’ve liked to have left five years earlier, and I probably would've gone independent maybe ten years earlier, because it’s - you know, I spent ten years in the wirehouse-type format, and looking back now, I think I could’ve build my business, my practice, and my skills, had I been able to do that all, in five years instead of ten years.

Sean: Yeah, I think that’s definitely some value, especially when we’re brand new, I know I was a lot younger coming in the business, but, you know, learning, and having that brand name behind us is worth something. I think for most of us that’s true. But, it doesn't take long, if you're really learning, and researching, and soaking up what you can, and learning from your work with clients. Eventually, people certainly, they buy us. Not the bull on the card right?

Gerald: Absolutely, sure. The relationships are your own. You know, having changed from, starting out with Paine Webber, and then the paperwork changed to UBS, to no fault of my own, and then I moved to Merrill, and then the paperwork with Merrill, and then it changed to the independent’s name that’s on there, and now the independent name is still there in small print, but it’s the name of my own firm.

Sean: Speaking of which, why don't you tell us for people can find you. Can you talk about your firm a little bit?

Gerald: Okay, the name of my firm, that my partner and I run, is Lightforce Financial. We operate here in the DFW metroplex a lot, and my office is in Flower Mound. Then my partner’s office is in Tarrant Country, and he handles a lot of areas south. Then my hybrid’s office is actually in Dallas, so we’ve got kind of three major countries covered there. Should I say my email or what? 

Sean: Why don’t you say your phone number for those who want to reach out? That might be a good way if people are looking or going independent and kind of want to hear from someone who’s done it. That might be a good way to reach you.

Gerald: Yeah. Let me give you my office number for LightForce. It’s (817) 717-4400.

Sean: Great. Gerald, I appreciate the time. I think people find this useful, especially if they’re career changers, and/or at the wirehouse trying to make a change. We appreciate your time in telling your story.

Gerald: Thank you! 

And there you have it. I hope you enjoyed that conversation. Gerald is a great guy, and has built a very nice, solid practice, and it’s a pleasure to know him. He is a great example of a career-changing financial advisor, who I think has really seen the benefits of being independent, and all the advantages that go with that, versus a wirehouse, or an employee model.

Gerald is also an expert in the Roth IRA conversion area. So, if you have some more detailed questions on Roth conversions and the benefits of those, and why you may want to do those for similar clients, Gerald’s a great resource for that. He’s done a lot of those in his practice, so feel free to reach out to him.

Check out Gerald's website