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Wirehouse Vet Starts RIA to Seize Business Opportunities

By Murray Coleman September 3, 2015

After working for 16 years at Wells Fargo Advisors, planner Chuck Eberly left on Aug. 27 to help start SevenBridge Financial Group. Joining him at the Harrisburg, Pa.-based RIA is his longtime business partner, Larry DeFluri. Their team managed about $250 million at the wirehouse. The new firm has hired Dynasty Financial Partners to provide front-, middle- and back-office services.

Q: What was the major reason you decided to leave Wells Fargo Advisors?

A: In our 23 years in the business, we’ve been very sensitive to creating the right sort of environment and structure. That means creating an experience for clients where their interests come first.

Q: Was that a problem at Wells Fargo?

A: Up to this point, my whole career has been spent as a wirehouse advisor. Over the last decade, I’ve been noticing the increasing influence of banking services in wealth management across the wirehouse channel. That may be a good development for the masses, but we felt like our clients needed a much more customized service model. That’s not to say a wirehouse structure is an unworkable one. It’s just that over the past several years, we’ve come to the conclusion that it’s not a good fit for where we want to take our practice in the future.

Q: How so?

A: If you think of Wells Fargo as one silo where everything’s coming through the mother ship, then it becomes increasingly difficult to explore more sophisticated options outside that base level of products and services. For example, a longtime client who is a fourth-generation farmer recently discovered a large deposit of natural gas on his land — so large gas producers are coming to him to lease his property. He’s finding himself in very unfamiliar business territory.

Q: How are you able to better help him as an independent?

A: My partner, Larry, used to work as a petroleum engineer. But providing advice about how to work with the petroleum industry was outside the bounds of normal recommendations supported by the wirehouse. And that type of advice is highly specialized — it can be quite expensive for clients to go out and hire petroleum engineers as consultants on their own. At Wells Fargo, we felt restricted in how much we could work with this client and other business owners to leverage our own expertise.

Q: Is that an advice model that you plan to use to fuel more growth?

A: Yes, in a wirehouse structure the only way for us to be compensated was by managing clients’ investment assets held at the firm. Now, we’ve got the flexibility to give guidance to a wide variety of landowners and businesses for a fee.

Q: Could you provide an example?

A: We’ve been working with a longtime client who owns a hunting camp in the Northeast. As an independent, we’re now in a position to support him as he expands his efforts to develop those 8,000 acres to produce more natural gas. Also, we’re finding that working outside of the wirehouse model increases our ability to work with foundations and nonprofits, in terms of presenting both a wider range of products and more-sophisticated research recommendations. We’re free now to go outside the mother ship to help our clients find the best third-party solutions to meet their individual needs.

Q: Will the move result in lower costs for your clients?

A: Yes, most of their fees will go down. We found much less flexibility in the way wirehouses let us set our fees. Basically, we’ve had to charge fees in the past on an account-by-account basis. But we’ve decided at the new firm to charge according to a family’s total assets. So that means the children and grandchildren of our existing clients are now going to be able to take advantage of the lower fee structures offered to their elders. In fact, everyone should benefit from a broader, more encompassing fee structure — as children build wealth, their parents’ fees can now move lower as well.

Q: Will going independent help your own compensation picture?

A: While we’ve had to invest our own money to build a new business, we’re not paying for extra layers of bureaucracy that come with working at a large wirehouse. If we make good decisions in terms of keeping business expenditures under control and picking the right growth opportunities to pursue, then we expect to make significantly more over time than working for someone else. So I hope we make more money, but the whole idea behind breaking away is to deliver a better service to the people we care about and serve. We think, over the long term, that’s going to prove the best way to grow our practice.