Financial Strategy Network, a Chicago-based financial planning firm with $550 million in assets, said Thursday that it had become an RIA firm custodying its assets with Pershing Advisor Solutions and was no longer affiliated with Raymond James Financial Services.
“This was a difficult decision because Raymond James has been a terrific partner and supporter of us during our early growth phase,” said Jim Weil, one of the firm’s four partners, in an interview with AdvisorOne.
FSN includes six advisors and about 20 staff members and was part of RJFS, the independent channel of Raymond James led by Dick Averitt, for the past 12 years. Previously, it was a Cigna affiliate. Weil’s three partners are Steve Merdinger, Craig Richart and Jeff Toner.
“We certainly would have preferred to have the FSN team remain affiliated with RJFS,” said Jim Fulp, managing director of the Raymond James’s independent-contractor division, in a statement. “We continue to have a significant number of independent branch managers who own and operate through their own RIA company under our Investment Advisors Division.”
According to Weil, broker-dealers are “better geared to individual producers instead of enterprises like what we created … so we had to make this change as a way to serve our clients more effectively, run our business more efficiently and build enterprise value.”
FSN specializes in providing financial planning and related advice to about 500 families that include “self-made individuals” whose net worth ranges between $2 million and $20 million.
Weil (left) says the firm’s business evolved over time and is now 95%, comprised of fee-based work. “Thus, it made good business sense to do a survey related to the strategic differences between broker-dealers and pure RIAs in terms of the platform or technology and the economics,” he explained. “Things have evolved, and we are going to be better on a pure RIA platform. It’s just a better fit.”
The back-office technology that FSN is embracing at Pershing, he says is very “robust.” (The firm compared it to systems at Schwab and Ameritrade.) “We did some intense analysis,” Weil said.
“One of our goals is to block-trade assets and rebalance strategies across households, not just accounts, and we need the software that can do that,” the advisor explained. “We had a good relationship with Raymond James for a long time,” said Weil, “and feel we are making a change for the right reasons.”
Wiel and his colleagues at FSN “came to the determination that there were economic and other business reasons which made it attractive for them to move to an independent account custodian with highly competitive pricing of both trading and other services for their clients,” explained Fulp of RJFS. “While we regret their departure, if they should they ever want to once more establish a relationship with Raymond James, we would warmly welcome them back.”