It's extremely rare for an RIA (registered investment advisory firm) to start up from scratch by someone outside the financial services industry - and we did it! Why? What was the motivation?
Why? I was recruited into the financial services industry because I have a combination of business sense, number sense and people sense. I loved the idea of using my varied skills and directly helping people have a better life.
I begin pursuing in parallel joining a well known national brokerage firm and starting my own RIA firm.
That led to a substantial offer to join the national brokerage firm. (They attempted to pressure me into accepting the offer but that's a story for another day.) Their unprofessional behavior was not unexpected and a another reason to go independent.
As I researched the industry, I discovered that the financial services industry is falling way short of helping consumers with their financial success and well being. The industry mastered and still excels making money on the backs of consumers through hidden fees and deception.
The only way to avoid the hidden fees and deception would be to start my own firm. The RIA model requires always placing your clients interests ahead of your own which is a fit to my beliefs.Here are a few of the gaps that we discovered in the financial services industry, that we have bridged with our firm's services.
Conflicts of Interest in Investing: Completely avoidable if you work with an independent RIA that refuses to use funds that provide kick-backs (commissions, transaction fees).
Evidence Based Investing: Active investing is a monumental failure. Evidence-based investing ensure you get your share of market returns, which sadly, a portion much smaller than 50% receive. Wall Street is based on a lie that active investing wins. Nothing could be further from the truth.
Financial Planning: It doesn't need to be so complicated to understand your situation or the advice that is being provided. When information and advice is presented in a complex way, it is unlikely to be accomplished. We go to great trouble to make it easier to understand and then act. Great advice is worthless if is not acted upon. Clarity leads to action. Confusion leads to inaction.
Safe (and Quality) Advice: The only way to make sure advice is Quality and Safe, is to have multiple independent experts reviewing the advice, and discussing it as a collaborative team. That's why we sub-contract to an independent CFP (certified financial planner) and the client's own CPA join us for an annual conference call to make sure the advice is as excellent (and safe) as possible. Many in this business attempt to impress you by adding "alphabet soup" to the end of the name on their business cards. And they probably know a fair amount, but they cannot provide independence and safety by themselves. They attempt to look important and educated with their "credentials" while they sell you products with kick-backs (commissions).
I am proud to be a rebel and do things completely differently and far superior to the mainstream financial services world. We are making a difference - a significant difference.