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A Message to Alex. Brown Advisors: Weighing Your Future Options
🎙️ The Breakaway Briefing: Episode Summary
A Message to Alex. Brown Advisors: Weighing Your Future Options
In this episode, The Gershman Group CEO Roger Gershman provides an urgent message to Alex. Brown advisors whose contracts are nearing their end, urging them to seriously evaluate their career paths amidst the firm's ongoing integration into the wider Raymond James system.
Gershman outlines the three primary choices available to these high-net-worth (HNW) focused advisors, detailing the pros, cons, and financial implications of each option, with a strong emphasis on the value proposition of true independence.
Three Pathways for Alex. Brown Advisors
Roger Gershman presents the following choices for advisors facing a decision point:
1. Stay at the Current Firm (Raymond James/Alex. Brown)
Pro: It's the simplest path ("stay, you know it already"), seamless for clients, and offers familiarity.
Con: It may not be the most lucrative option, and advisors still deal with the same compliance and platform limitations, which may not be robust enough for their sophisticated, HNW client base.
2. Go Independent via Raymond James' Platform (Indie)
Pro: This is a good solution for seamless client account transfers, and the advisor's name is on the door. Advisors can achieve high net operating margins (60-70%) with favorable tax treatment (1099 income). Additionally, Haig Ariyan (former Alex. Brown CEO, now at Redbird) is reportedly interested in taking a large equity stake at a long-term capital gains valuation, offering immediate liquidity and a path to a higher future sale multiple.
Con: The platform may not be as robust as desired, and advisors are still dealing with the same Raymond James compliance department.
3. Full Independence (RIA with Custodian or Other Partners)
Pro: Offers the highest net operating margin (averaging 70%) and the most sophisticated, open-architecture platform using custodians like Schwab, Fidelity, or Pershing. Advisors gain access to competitive solutions like alternative investments, SMA products, and lending solutions. They truly own their business, making it highly valuable in the independent market with high multiples (7x+ of net operating margin).
Con: Requires a more substantial transition than the Raymond James Independent option.
The Equity & Valuation Advantage
The podcast stresses that independence provides an equity opportunity far surpassing typical wirehouse retirement or transition deals:
Tax Benefits: Earnings are classified as 1099 income instead of W2, and equity transactions are taxed at the favorable long-term capital gains rate.
Valuation: In the independent market, an advisor's business is valued highly, with multiples based on net operating margin, allowing for the opportunity to sell a piece now for liquidity and hold the rest for future growth and a higher overall valuation.
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By Roger Gershman🎙️ The Breakaway Briefing: Episode Summary
A Message to Alex. Brown Advisors: Weighing Your Future Options
In this episode, The Gershman Group CEO Roger Gershman provides an urgent message to Alex. Brown advisors whose contracts are nearing their end, urging them to seriously evaluate their career paths amidst the firm's ongoing integration into the wider Raymond James system.
Gershman outlines the three primary choices available to these high-net-worth (HNW) focused advisors, detailing the pros, cons, and financial implications of each option, with a strong emphasis on the value proposition of true independence.
Three Pathways for Alex. Brown Advisors
Roger Gershman presents the following choices for advisors facing a decision point:
1. Stay at the Current Firm (Raymond James/Alex. Brown)
Pro: It's the simplest path ("stay, you know it already"), seamless for clients, and offers familiarity.
Con: It may not be the most lucrative option, and advisors still deal with the same compliance and platform limitations, which may not be robust enough for their sophisticated, HNW client base.
2. Go Independent via Raymond James' Platform (Indie)
Pro: This is a good solution for seamless client account transfers, and the advisor's name is on the door. Advisors can achieve high net operating margins (60-70%) with favorable tax treatment (1099 income). Additionally, Haig Ariyan (former Alex. Brown CEO, now at Redbird) is reportedly interested in taking a large equity stake at a long-term capital gains valuation, offering immediate liquidity and a path to a higher future sale multiple.
Con: The platform may not be as robust as desired, and advisors are still dealing with the same Raymond James compliance department.
3. Full Independence (RIA with Custodian or Other Partners)
Pro: Offers the highest net operating margin (averaging 70%) and the most sophisticated, open-architecture platform using custodians like Schwab, Fidelity, or Pershing. Advisors gain access to competitive solutions like alternative investments, SMA products, and lending solutions. They truly own their business, making it highly valuable in the independent market with high multiples (7x+ of net operating margin).
Con: Requires a more substantial transition than the Raymond James Independent option.
The Equity & Valuation Advantage
The podcast stresses that independence provides an equity opportunity far surpassing typical wirehouse retirement or transition deals:
Tax Benefits: Earnings are classified as 1099 income instead of W2, and equity transactions are taxed at the favorable long-term capital gains rate.
Valuation: In the independent market, an advisor's business is valued highly, with multiples based on net operating margin, allowing for the opportunity to sell a piece now for liquidity and hold the rest for future growth and a higher overall valuation.