Ten Years of Cultivating Wealth
As 2016 has been trending this week, I think many of us have been reminded that a lot can happen in ten years. I know it was a big year for me!
Year One of My RIA
10 years ago, in January 2016, I was anxiously awaiting the approval of The Stanich Group LLC as an SEC-Registered Investment Advisor. Although I had been a financial advisor since 2007, I was officially independent in March 2016. And “Cultivating Wealth” was just the name of my blog!
Not to brag but starting my own firm was a kind of a bold move. I could have stayed where I was and probably made more income. My branch manager’s style could be described as “benign neglect” and I could mostly do as I liked, which is frankly why I stayed as long as I did (7 years). But I have always had an independent streak, preferring to do things my way and chafing under bureaucratic structures. I wanted to be one of the financial planning “cool kids”: fee-only, fiduciary, and tech-savvy. I don’t want to explain all the workings of the financial services industry, but I felt this was the best structure for clients and I couldn’t do it all under the affiliation of a broker-dealer.
I had set the wheels in motion in 2015, but in January 2016, I was still planning my escape from my branch office (long story short: they were Not Happy), networking with independent firm owners (thanks, XYPN!), negotiating vendor contracts, and signing a (thankfully short-lived) contract with a co-working space in the Wall Street Trump Building (remember when his political campaign seemed like a publicity stunt?).
I was the only financial advisor in my firm, and revenue was 1/10 of where it is today. I was able to bring most of my clients to the new firm, but starting my own RIA at this stage would be considered premature (if not delusional), by traditional financial advisors at the time.
Family Transitions
I had a lot going on personally in 2016 as well. Although our twins were born in late 2014, I realize now that I was really still physically recovering in early 2016. But I was ten years younger, and I miss the days when estrogen was abundant and I didn’t need my reading glasses!
At the start of the year, we were raising three kids (including their 7-year old brother) in a two-bedroom apartment in Brooklyn Heights. Three kids sharing a bedroom divided with some Ikea cabinets was less than ideal. I like to think that my oldest will be a good dad because he knows that babies cry. We lucked out when a 4 bedroom came available in the building and moved later that year, using one of the bedrooms as my office, and dumping the leased office space in Manhattan. I’ve been working from home ever since.
Brooklyn feels so far away now, as we moved to Montauk in 2019. But even in 2016, Montauk was my happy place. Here’s a favorite pic from 2016:
I was also deeply mourning the loss of my dad (who died in December 2015) and playing his records when I needed a good cry.
Lessons Learned
I’ve been thinking a lot about how much has changed in ten years, but also about what I have learned as an entrepreneur.
Teamwork Makes the Dream Work. The best things happen with a team. I spent my first few years as a financial advisor on my own. Finding clients, preparing paperwork, investment research, and entering trades were all on me. That was all good experience to have, but the magic happens with a team. It’s more fun for the team (including me), and clients are drawn to a team-based approach.
Quality > Quantity. In a services business, there is a huge benefit to focusing on higher-revenue clients. Because we are so deeply involved in our clients’ lives, we need to limit how many we work with. According to Dunbar’s Number, humans can only manage 75-125 relationships at a time, which correlates with the average number of clients managed by an advisor. Over ten years, our number of clients has only grown by about 30%, but our average revenue per household has grown by over 300%. This is a more satisfying way to do business for our team and our clients.
The Power of Compounding. Financial planners are familiar with the concept of compounding in investment portfolios, but it’s very cool to see it as a business owner. It took 8 long years (longer if you count all the time before launching the RIA) to get to $100 million of Assets Under Management (AUM), but only another two to get to $200 million. Growth is accelerating, which is exciting.
Virtual + Local = Awesome. Working from home has saved my team thousands of hours commuting and saved the firm hundreds of thousands of dollars in office space rent over the last ten years. Zoom is more convenient for everyone, but it takes longer to build relationships with clients and to train employees. But some of the best time and money I have spent is on live, in-person meetings and events for our clients and team. Keeping our team and our clients somewhat concentrated in the NYC area makes it possible to get together in person, at least a few times a year.
Looking Ahead
Ten years from now, I wonder where I will be and what new lessons I’ll have learned. My kids will be young adults and my husband and I will be inching toward retirement.
Will we grow our team, partner with another firm, or build our own tech using AI? While the tools and environments may change, I’m excited to see what comes next.
Thank you to everyone who has been a part of Cultivating Wealth’s journey so far. Here’s to the next decade!
The information presented in this article is the opinion of Cultivating Wealth and does not reflect the view of any other person or entity. The information provided is believed to be from reliable sources but no liability is accepted for any inaccuracies. This is for information purposes and should not be construed as an investment recommendation. Past performance is no guarantee of future performance.
