My Move: Cycling Through the Wirehouses
Richard Fennema left Morgan Stanley in February to start his own firm, ARK Financial Management, which is affiliated with the Wells Fargo Advisors Financial Network. He manages about $75 million for 150 households, in Southlake, Texas. Since starting as a Merrill Lynch FA in 1995, Fennema has worked at each of the wirehouses. In 1999 he joined a firm that eventually became part of UBS Financial Services, where Fennema became a producing branch manager, still earning most of his income from his own clients. In 2007, he joined Morgan Stanley in a similar capacity.
Q: What was the main reason you left Morgan Stanley?
A: It was getting more and more difficult to operate, with more restrictions that didn’t seem to make a lot of sense in the field but were coming down from above. It was the ability to manage my practice and myself the way I felt was the best solution or fit for my clients.
Q: What was the hardest part of making your move?
A: The hardest part of the whole process is the way our industry handles change. You can’t tell anybody, and have to sneak around. I couldn’t tell the people I worked with, and I couldn’t tell my clients. If you’re not completely ready in your new office on Day 1, then you have a real problem. I had all that set up.
Q: What percentage of your clients and assets did you retain?
A: Right now it’s at 90% — a little less on the client side and a little more on the asset side. My assistant, who had been with me for over a decade, came with me. Without her I would not have made the change. We were confident we wouldn’t have that much difficulty in bringing clients over. She was very frustrated with the back office at Morgan, as was I.
Q: How have clients benefited from your move?
A: Not having to deal with the day-to-day [branch] manager requirements of even the small office I managed gives me way more time to take care of my clients — more time for research, conversations and their needs. As far as products go, it’s the same or maybe a little better than at Morgan.
Q: Why did you decide to take the “independent-while-affiliated” route?
A: I felt like my clients would be more comfortable with the Wells Fargo name behind us. As it turned out, that was quite correct. For many of my larger clients, we had to explain in detail how this worked, that this wasn’t a Madoff-type situation. So I’m very happy that I did, because I think a lot of clients would not have followed me.
A: It’s a little early to tell exactly the percentages, but production is definitely a lot higher. I do think we’re going to do better overall. I like my life a lot better now. But I also have my own expenses to take care of. We pay fees for everything, like software, that we use through Wells.
Q: How about clients’ fees?
A: Here it’s less restrictive. Companies now want everyone to go fee-based, which I don’t think is the best thing all the time. For one, it’s not appropriate for every client. If the client is set in their portfolio and doesn’t need a lot of activity, a fee-based model is better for you than it is for them.
Q: Any advice for “captive” FAs who are thinking about leaving?
A: Make sure you take your time and look at all your alternatives. Don’t do it in a hurry. And then make sure you’re the type of person who can operate with very little supervision. You have to come in every day, take care of your compliance issues and meet with all your clients. Not everybody wants to or can do that. We do have a regional supervisor who comes in every month or so. It’s not like I’m an independent with absolutely no supervision. This also makes our clients a little more comfortable.
Q: You’ve worked at all the Big Four wirehouses. What are some of the differences?
A: Merrill Lynch was a long time ago, so it’s probably changed a lot. At UBS, the Swiss bank mind-set made it difficult [for the higher-ups] to understand the differences in advisory business in the U.S. Morgan Stanley was very restrictive as to the types of investments you could use. At WFA Financial Network, we have regional groups of advisors I can talk with.