Leo Kelly left behind big firms like Merrill Lynch and HighTower to launch his own independent firm two years ago so he could customize and grow his firm the way he wanted.
Kelly founded Verdence Capital Advisors, a Maryland-based wealth advisory firm and multifamily office, in the summer of 2017 after breaking away from HighTower Advisors, where he was a managing director and a partner.
The practice that today is called Verdence got its start during Kelly’s time at Merrill Lynch. The Kelly Group at Merrill Lynch Wealth Management formed in 1999.
In 2012, Kelly decided to leave Merrill Lynch, where he’d worked since 1996, to look for a better cultural fit for his practice.
“I loved Merrill Lynch, but after the financial crisis [and] the Bank of America buyout, culturally we just decided what we were looking for was the independent path,” Kelly told ThinkAdvisor.
“We decided not to hang the shingle on our own because, frankly, I honestly didn’t believe we knew enough about being a business and the intricacies of running a practice,” Kelly explained. “So HighTower was that support level.”
By July 2017, Kelly felt the practice was ready to “hang the shingle” on their own and ultimately felt that launching a truly independent firm was the best route — and thus Verdence was born.
One of the primary motivators for leaving HighTower was that Kelly and his team “had a very distinct vision for what we thought a business like ours should be.”
“We were ready to do it our way and customize very specifically to our type of client — as opposed to a broader type of client,” he told ThinkAdvisor. “And that’s why we wanted to break off.”
Verdence’s clients are predominantly business owners and senior corporate executives, or people dealing with liquidity issues and liquidity management.
Kelly also wanted to be able to build an infrastructure that could better accommodate the firm’s growth.
When the practice left Merrill, it had about $600 million in assets under management. Today, that’s grown to $2 billion.
The size of the firm has grown, too. When Kelly and the practice left Merrill and went to HighTower, the practice had six people on staff. When they left HighTower, they had 18. Today there are 28 people on staff.
“When we started Verdence, the first thing we did was build out our capacity,” he said.
The firm hired investment professionals, a head of strategy from Deutsche bank, and a director of marketing.
The firm also invested in new technology. According to Kelly, its tech spending has doubled — involving a completely redesigned CRM, performance reporting, planning, business practice management tech, market analytics, website and content delivery.
“Every advisor now sits in front of their desk in front of a uniformed piece of technology that pulls down all these different resources together,” Kelly said.
The firm also “significantly bolstered” its investment research arm and delivery mechanisms, according to Kelly.
“We really built the firm out very quickly,” Kelly said. “Now we’re ready to grow into it.”
The firm continues to have what Kelly called “pretty aggressive growth plans.”
“As we built out Verdence, we make decisions based on having 10 offices. Our plan is to expand to a national footprint,” Kelly further explained in an email.
The reason for the firm’s expansion and growth plans is a result of the firm’s view that “you grow into your capacity.”
“In other words, you expand capacity, [and] grow into it … which means you have to be very confident in your strategy to grow because you’re always investing out in front of it — if you do it correctly,” Kelly said.
According to Kelly, this way the client doesn’t feel the pressure of the firm’s growth or restrained resources.
“In our business whenever a client feels the pressure of your growth, that’s bad,” he said. “You can never get to that point.”
—Related on ThinkAdvisor: