On a hot, sticky August afternoon in northern Virginia, three Washington-area advisors created their own cool heat inside as they discussed what they learned about themselves and their firms from participating in Schwab Advisor Services’ “Insights to Action” (ITAP in common parlance by participants, if not a formal name for the program). By many of the usual success measures used by RIA firms—growth in clients, in revenue and in assets under management—their three firms were already successful. But Dee Ann Remo, Michael Mussio and Barry Glassman and their colleagues suspected that they could do better, and that there might be different, unique ways to measure success for their firms. That is what participating in the ITAP program—present tense intended—taught them about themselves and their firms.
Over the course of several hours at the local Schwab office, the advisors shared the reasons why they had signed up for the program, what they had learned and where they were headed. “If you were driven by assets under management” alone, said Glassman, “strategic planning would be easy.” Remo said that while her firm was “ready to embrace” a plan, the process of building a strategic, customized plan made her realize that doing so “can get you where you’re going more quickly.” Mussio said that the driver for his firm was a desire to build an excellent client service experience, but that the likelihood of the founder’s retirement made the team members ask themselves, “What’s going to happen when Susan retires?”
Rather than provide direct answers to any or all of those questions, participating in ITAP, the advisors said, gave each firm a structure with which to answer any question, be it succession planning, career paths or all the issues revolving around growth.
Who They Are; What They Want
Michael Mussio is a portfolio manager and part of the management team for FBB Capital Partners in Bethesda, Md., an RIA firm that’s been in business for 25 years but is in many ways a much younger company. It had been acquired by a roll-up firm, but several years back, management went private again. The firm manages about $580 million for mostly high-net-worth individuals and some small institutions.
FBB decided to participate in the ITAP program, Mussio says, because while “up to this point we’ve been successful,” the firm still dealt with issues around growth and strategic planning “on a more reactive basis.” At FBB, he says, “we spend a lot of time on serving clients and managing the portfolios but less time on the actual business.” Following the ITAP strategic planning program presented an opportunity, Mussio says, “to get some guidance from Schwab on how to be more proactive on some of these challenges we’re facing as we grow.” There’s another twist to FBB’s story. One of the original dynamic founders of the firm has retired, and the other may be looking to do the same over the next five or six years, which raised the succession planning issue for management, employees and clients. “We’ve covered the ‘bus’ event,” Mussio says, referring to the proverbial “getting hit by a bus” scenario, but having a “framework around succession planning was a big driver for us.”
Barry Glassman is president of Glassman Wealth Services, a fee-only financial planning and wealth management firm based in McLean, Va. Founded three years ago by Glassman, the firm manages $550 million, providing “family-office-level services” to families that, Glassman says with a smile, “used to be considered HNW clients, though they don’t think of themselves that way.”
Dee Ann Remo is managing director of Richmond, Va.-based Heritage Wealth Advisors, a now seven-year-old firm that she calls a “multi-family office” for varying levels of family wealth. In addition to providing fee-only investment management for those clients, Heritage Wealth also does tax planning (Remo, a CPA, says she “grew up in the accounting world” at KPMG) and tax compliance for the majority of clients, charging separately for “high-level” wealth management services.
Be Ready, Do Your Homework, Go To Workshop
Glassman has a warning for his peers who are considering whether to undergo a strategic planning initiative—whether it’s Schwab’s version or another. “Unless your firm is ready, then it’s not the right time,” he cautions. “We happened to attend the workshop at the perfect time for the firm—three years ago when we started the firm, it was too early; three years from now would be too late.” That’s because, he says, the firm already had goals in place—the technology, research and systems, and human capital.
Having Schwab as its partner was also critical, he says, since it “wasn’t an outside consultant who could come in and put together a mission statement you could frame on the wall in your lobby.” Schwab, he says, “cross-pollinates” all the time, collecting data from “7,000 of its advisors, a thousand in its benchmarking studies, and hundreds and soon to be thousands” who are taking advantage of the ITAP strategic planning process. “Yes, they hope we succeed in a way that will benefit them, if we choose to custody with Schwab, but […] they’ve spoken with and had the experience of people who do exactly what I do, a small and growing RIA firm; they can speak the same language.” That extends to the point, Glassman says, that “the workshop materials that guide us through the process are designed for me and my businesses—it doesn’t necessarily apply to a small construction firm or an electrical contractor.”
Schwab’s relationship managers and internal consultants led by Scott Slater are critical in the process as well, with all three advisors mentioning in particular Bob Ciullo, the managing director for the D.C. area for Schwab Advisor Services, and Lori Silverthorne, the D.C. relationship manager for Schwab. “As we’re going through this with Liz [Manibay, a Schwab senior business management consultant],” recalls Glassman, “she’d call us out on the ‘easy outs’—if we say we can’t do something, she will challenge us because she’s known other firms who have said that before and overcome it.”
Glassman Wealth already had goals, he says, revolving around number of clients and AUM, but that wasn’t enough. “If our goals were based on assets under management, strategic planning would be easy. We’re not driven by AUM. If we sign on a handful of clients every year and are able to manage them and our current clients well, we view that as success.”
Heritage Wealth’s Remo’s readiness sprang partly from “a request by my management group that my top goal for the year was to develop and implement a strategic plan; thankfully, Schwab decided at the same time that this was going to be the focus” of their ITAP workshop programs. “Schwab was able to get us started because they know our industry, they know us. You can get where you’re going probably more quickly because of that.”
Part of the ITAP process is for each firm to complete a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, and Remo says that “when we sat down to look at our weaknesses, we realized we had some pretty darn good successes.” While she says “the whole exercise was useful,” she also realizes that “we had those successes in spite of ourselves.”