PANC 2013: Independence Days

Panelists at the PLANADVISER National Conference, in Orlando, Florida, weighed in on the restrictions and conflicts of interests that can spur advisers to go independent.


Becoming an independent registered investment adviser (RIA) requires an adviser to have the skills of a small-business owner or consultant, said Jeb Graham, retirement plan consultant and partner at CapTrust Advisors. “There are the challenges of building a practice, and measuring profitability and client deliverables,” he said.

However, most advisers who go independent cherish their newfound freedom, said Michael Maresh, principal with The Maresh Yoshida 401k Group. Maresh said he and his partner, Henry Yoshida, were “at a major wirehouse. The restrictions and conflicts of interest caused us to ask if this is the place for us,” Maresh said. “We wanted to have an RIA away from the broker/dealer (B/D). We found Raymond James in 2011. We discovered that 50% of our clients made up 10% of our revenue, so we transitioned them out.”

In the end, Maresh said, “leaving the wirehouse was the best decision to serve clients. Today, we have all ‘A’ clients. It’s been a great transition.”

Gregg Andonian, principal with Baystate Fiduciary Advisors, said he started out in the business as a wholesaler 10 years ago. In 2002, he decided to become an independent adviser with a solo practice. “I created a fee-based model that includes fiduciary services,” Andonian said. “Everything is repeatable. The first three years were hard, but then I became profitable.”

However, advisers who decide to go independent with a one-person practice should be prepared to put in extra hours, Andonian warned. He also said there are “four holes” in his model. “I have no secretary, so I have to manage my time carefully, he said. “Larger retirement plans, those with $100 million or more in assets under advisement, are hard to land as clients, since they tend to like large practices. Clients ask about my succession plan in RFPs [requests for proposals], and there are only so many hours I can devote to participant education and one-on-one meetings.”

 Even in independent shops with several partners and a support staff, time management is critical, according to Maresh. “Each position should have unique job functions,” he said. “Make sure you find the right people, and hire before you expand your business and take on new clients.”

To differentiate his practice from competitors, Andonian says he focuses on three “Ps”: pricing, process and personality. “I have very little overhead and never charge above 36 basis points.”

When pitching to new prospects, The Maresh Yoshida 401k Group emphasizes that the practice’s “sole focus is on retirement plan consulting and that we have expertise in ERISA [Employee Retirement Income Security Act] consulting, which means we have no conflicts of interest,” Maresh said. The firm tells prospects that “to really affect participants, we do a lot with plan design—automatic enrollment, automatic increases and stripping all revenue sharing from the plan. We also have plan sponsors pay for recordkeeping. We want employees to have the best chance for a successful retirement.”

To develop new business, The Maresh Yoshida 401k Group partners with other retirement plan professionals, such as insurance companies and ERISA attorneys, Maresh said. “Those relationships are really key,” he said. “A personal introduction to a company is invaluable.” In addition, the firm participates in industry events “to get our name out there.”

Andonian said he built his practice through cold calling. To make sure he stays on top of this skill, he still does a fair amount of cold calling, but the majority of new business for Baystate Fiduciary Advisors comes through referrals, he said.