A version of this article was previously published by RIABiz.
WHEN TRANSITIONS GO RIGHT – EXCEPTIONAL RIA FIRM LEADERSHIP AND A STRONG FIDUCIARY CULTURE MAKE FOR A SUCCESSFUL RIA FIRM ACQUISITION
Like many solo personal financial advisors, I thought “business succession planning” was many years distant, in terms of my attention. I had attended the sessions on the topic at several conferences, and I had read many articles extolling the need of older practitioners to plan for the future. And I had put it off.
Until late last year. The daily stress of the pandemic, as well as the self-isolation undertaken to ensure that I could continue to live and serve my clients, led me to explore the possibilities sooner rather than later. Pressure from my state regulator to adopt a “formal business succession arrangement” during my last two biannual scheduled exams carried some weight, as well.
Impetus for the decision can also be found in the rapid technological changes affecting portfolio management and personal financial planning. While I served mostly retirees, even my younger retirees indicated their attraction to online programs that facilitated collaborative financial planning.
New business models had also exploded over the past decade, including monthly subscription fee services, and service via video calls by Certified Financial Planner™ service providers. While I did not even have a web site, preferring to rely strictly on referrals for any new prospects, I observed the tremendous growth of firms that had devoted some of their resources to webcasts, podcasts, and other platforms.
For those few times I met with prospective clients in recent years, I found that – despite their respect for my abilities as a financial planner and investment adviser – the prospect preferred to work with “someone younger.” Simply put, at the age of 63, I was beginning to feel old.
As a full-time Associate Professor of Finance at Western Kentucky University (WKU), and Director of its Personal Financial Planning Program, I knew that the time to devote to implementing new business ideas was limited. I strongly considered taking on a junior partner, and had even identified and had discussions with a former student (in my ten years of instruction) that shared my values and had skills that would be complementary to my own.
Then in mid-December of 2020, I received a call from one of the largest independent RIA firms in our region, and a Barron’s Top 100 RIA firm (2020) – ARGI Investment Services, or more commonly known as ARGI. But this wasn’t my first encounter with the company. Over the years ARGI and WKU have formed a strong bond with many of my students attending office visits, and numerous WKU alumnae building their careers within the firm. With our working history, I knew the firm well, and had enormous respect for its fiduciary culture. After this initial contact, a second call was scheduled, this time with ARGI’s CEO, Joe Reeves, CFP©.
In the interim, I did my homework and prepared an RFP. As a lawyer for 35 years, I felt fairly confident handling any negotiations and contract reviews that might occur. But I needed more information. So, I downloaded and read Dave Grau Sr., JD’s excellent book, Buying, Selling and Valuing Financial Practices: The FP Transitions M&A Guide. Further insights were gained from valuation and practice sale articles found within Michael Kitces’ always-fantastic blog, Nerd’s Eye View, and from various stories found at RIABiz.com.
Seeking to “test the market” and see what other opportunities might exist, I listed my firm as a “seller” on three websites. This led to over two dozen inquiries, and conversations with several firms that I thought might be a good fit, including firms that provided financing to purchasers of RIA practices, which would be important if I chose to merge with a smaller RIA.
I also spoke with two larger practice sale consulting firms, and was quite impressed with the services they offered. I understood the marketplace well, had legal and tax knowledge, and could present and digest corporate financial statements. Yet, even with all this knowledge, I believed that I would likely engage one of the firms as the process unfolded. The services offered by these two firms would, no doubt, help to ensure a “good fit,” as well as a good price and fair terms.
As my investigations and meetings continued, it became obvious to me that I was not just looking to sell my practice. I was also looking for a position within a firm, for the next 14 years, as I had previously established my vision to continue working as a financial advisor until I was 77 years old. (While working as a financial advisor to such date was planned, I also thought I would retire as a professor at the earliest of either age 70 – or whenever my students no longer listened to me. I wonder if some students might have said I should have retired long ago!)
I was not just looking for a position to continue to serve the 17 family groups with whom I had deep relationships. I was also looking for a role within a firm in which I could contribute in a meaningful way, while teaching nearly full-time while working part-time for the firm (approximately 500 hours a year). I was also aware that my ongoing advocacy on the fiduciary standard might dissuade some potential acquirers, while it might be attractive to others.
And then I had my scheduled call with Mr. Reeves, and what a call it was.
Joe, as any good CEO might do, inquired of me as to what I desired from any potential transaction. I apprehensively shared my desires – to merge with a larger firm that had more resources, to be part of a team that would ensure high-quality service to my clients should something happen to me, and to work for and make a meaningful contribution to the firm for 14 years.
To my surprise, Joe inquired further, stating: “Ron, I truly believe that hiring great people, and having them in the roles they are uniquely suited for, is the secret for the success of our firm. If you were to work for ARGI, what would be your ideal role?”
Joe’s question led me to pause and think for several seconds. I had mapped out my “ideal job” in my head over the past several years. I replied, “I believe I am uniquely suited to be an educator, whether it be in the classroom, or through my writings.” And then I wondered how my answer might be received.
We continued our conversation for another 15 minutes or so, exploring further the details of my passion. I had researched ARGI in detail, and knew that ARGI had tremendous growth both organically and through acquisitions of other practices.
As I delved deeper into ARGI, what surprised me the most was ARGI’s breadth and depth of its business units. A large team devoted to developing and managing diverse investment strategies, to dozens of financial planners, now serving clients through three separate client service models (from a monthly subscription model for core financial planning services, to comprehensive financial planning and investment management, to family office services).
But as I learned more about the firm, I discovered entire service lines I wasn’t even aware of. ARGI also included a large CPA firm, retirement plan offerings, corporate financial education, charitable trusts and endowments, business management, accounting, insurance, and even more through all of its affiliate companies. This breadth of financial services excited me.
We ended the conversation by setting a date for two weeks later so he could think through what he learned about my goals and passions, and perhaps present a proposal. As I contemplated the discussion over this period, I reflected on my own goals more thoroughly. My prerequisites included a firm with a strong fiduciary culture, a firm that was growing in order to create opportunities for its employees, a team to work with whom I would feel comfortable working with to serve my clients.
As I furthered my due diligence into ARGI, I discovered the newly formed ARGI Trust as a division of Advocacy Trust LLC. ARGI also had a division devoted to private equity. Plans existed to launch a TAMP within the near future, to provide a broad range of services to other RIAs – far beyond the boundaries of may turnkey asset management programs.
My personal reflection over those two weeks was rewarded in my subsequent call, as scheduled, with the CEO. He outlined a role for me within the firm involving not only serving my current clients, but as a writer and producer of educational content for ARGI’s clients, prospective clients, and financial advisors. Joe also communicated a very fair offer to me to acquire my client relationships.
He further suggested I join a team with two advisors I already knew and respected, PJ Gibbs, CFP® and Jason Simpson, CFP®, assisted by Felicia Cole – one of ARGI’s Client Experience Administrators. And, while it would be likely that I visit many of the firm’s nine offices (from Michigan to Georgia), I would primarily work from an office just a short drive away from my home in Bowling Green, KY.
After just a few questions, it appeared my desire to contribute in a positive way to the growth of a firm could be more than realized, using my “unique abilities” as Joe characterized them. Having previously thought through what was most important to me, and seeing that this would occur, I immediately accepted Joe’s verbal offer. Within a week we had signed a letter of understanding, with a well-written and fair contract following.
On March 4, 2021, I officially joined ARGI. For one day a week during March and April (as I was teaching full-time), I received instruction in ARGI’s systems and processes, and had video sessions with nearly all of ARGI’s business units.
The client transition process was aided by a team within ARGI culled together for such a transition. All 17 of my clients followed me to ARGI. With the semester now over, this summer PJ Gibbs and I will travel together to visit most of my clients, who reside at various locations from Florida to Boston to Chicago to Texas. Like me, PJ values in-person visits, to get to understand clients’ goals and needs better.
My biggest surprises since joining ARGI? First, how nice everyone is. There is a team spirit present that somehow exceeded my already positive impressions of the firm. I was warmly greeted by so many members of the firm the day I joined, through emails and text messages. Not surprisingly, the two dozen or so graduates of Western Kentucky University’s B.S. Finance (Personal Financial Planning) degree program conveyed to me some of the most enthusiastic welcomes.
Second, the insights I’ve already gained in so many areas from ARGI’s more specialized team members. I’ve discovered new and better ways to engage with clients and prospects, and to serve their diverse needs.
Third, the receptiveness to ideas I’ve brought to the firm. While in most organizations a new employee might hesitate to offer up ideas within the first few months, within ARGI my suggestions have actively been sought out, several have been adopted, and other insights I’ve shared have influenced ARGI’s plans for the future. I attribute this to ARGI’s ESOP, as the firm’s team members appear to all pull together to look for ideas – from whatever source – to improve services to clients and to propel the firm’s future growth.
Fourth, the strong leadership, not just at the very top but extending down to the managers of various divisions and offices. Not only is the entrepreneurial spirit quite strong, but the strategic and tactical planning is executed brilliantly and collaboratively. Over the years I have come to admire those who have the unique ability to establish and successful execute upon well-thought-out directions for a firm, or for a division within a larger firm, and I have already been able to work with several of ARGI’s very talented leaders.
Looking back, I realized that the time was right. For me. And for ARGI, having reached the size it had rapidly achieved, to be able to utilize my passion for education and writing in a way that positively contributes to the firm’s growth. I look forward to working with ARGI, hopefully for the next 14 years or more, as I enter this next stage of my career and life.
And I wonder how large ARGI will be a decade from now, as it pursues its vision through strong organic growth, service offerings to support other RIA firms, and via further practice acquisitions. All accomplished by exceptional hires, doing roles for which they are uniquely suited.
ARGI, a Louisville-based personal and business financial advisory firm, is pleased to announce that Dr. Ron A. Rhoades, J.D., CFP® has joined the firm as a Financial Advisor and Content Specialist.
ABOUT DR. RHOADES
Currently, Dr. Rhoades serves as Director for Western Kentucky University’s Personal Financial Planning Program, as well as an Associate Professor of Finance, positions which he will keep for his tenure at the university. As an educator, he has received numerous industry and educational awards, including the 2020 Gordon Ford College of Business Teacher of the Year Award.
Outside of teaching, Dr. Rhoades is regarded as a national authority on the application of fiduciary standards to investment and financial advice, and he frequently visits with policy makers on Capitol Hill, the U.S. Securities and Exchange Commission, and U.S. Department of Labor. Last fall he received the 2020 Tamar Frankel Fiduciary of the Year Prize from The Institute for the Fiduciary Standard. As a J.D., he is a member of the Florida Bar, and has practiced as an estate planning attorney. Additionally, he has dedicated much of his time to financial content creation. He has published several books on financial planning, estate planning and investments topics, as well as written hundreds of articles and blog posts on the topics.
“The addition of Dr. Rhoades is another valued asset of academia to the ARGI team,” explained Joe Reeves, CFP®, and CEO of ARGI. “Through our team, we are dedicated to industry thought leadership. We want to be a continual resource for our clients by providing compelling ideas, perspectives, and education on all areas of financial services. We’re excited and honored for Ron to join our team, and to add his industry knowledge to a growing base of financial professionals.”
ARGI is a regional full service financial advisory firm, headquartered in Louisville, KY. With the mission of improving lives with every relationship, ARGI’s team of dedicated consultants provides comprehensive financial planning and investment management through ARGI Investment Services, a Registered Investment Advisor; tax planning through ARGI CPAs and Tax Advisors and SCA CPAs and Advisors; insurance solutions through Advisor Insurance Solutions; business services through ARGI Business Services, all of which are divisions of ARGI Financial Group. Trust services provided by ARGI Trust, a division of Advocacy Trust LLC.