TruClarity targets midsize wirehouse breakaway reps to launch new RIA firms

From incubator relationship to back-office service provider

Jan 6, 2017 @ 2:15 pm

By Jeff Benjamin

A relative newcomer to the general concept of rollups and strategic acquirers, TruClarity is making a deliberate push for midsize wirehouse brokers looking to breakaway as registered investment advisers.

Just 18 months old, TruClarity, based in Tampa, Fla., is structured as a business incubator for brokerage reps managing between $100 million and $500 million that need help going independent.

“That size range represents a bit of an untapped market,” said Alois Pirker, research director at Aite Group.

“The larger reps typically have options to go it alone, become part of an aggregator or partner with another firm,” he said.

Pamela Stross, TruClarity chief operating officer and president of management solutions, described the model as an incubator that develops into a service provider relationship with breakaway reps as they morph into independent RIAs.

“We will start as early as helping to create a business plan, and take them through to the point of breaking away,” she said. “From there we become a service provider, handling back-office operations and anything else that doesn't involve the advisory service.”

Since its start, TruClarity has launched three RIA firms, which combine for approximately $800 million under management.

The most recent launch involves 17-year brokerage veteran Matthew Pietzak, who managed $300 million at PNC Wealth Management and is now essentially starting from scratch with his new RIA firm Vantage Private Wealth in Naples, Fla.

“I looked at all the options, including independent broker-dealers, regionals and rollups, but TruClarity offers the best combination of back-office support and independence,” Mr. Pietzak said.

(Search: Advisers on the Move database)

Because of a 12-month noncompete clause preventing Mr. Pietzak from soliciting his former PNC clients, he describes his new firm as “starting from ground zero.”

According to Ms. Stross, that reality essentially puts the new RIA and TruClarity in the same boat, with both parties motivated to help the firm grow.

“Typically, we try to work with the adviser so that as they begin to receive revenues, that's when our fees start,” she said. “We are trying to customize each solution to each adviser, and some will take the whole offering and some will take pieces of it.”

The whole offering can include the full slate of setting up a new business, even down to shopping for office space and negotiating lease agreements, because those are the kinds of things with which brokers might need help.

(More: Steward Partners nears $5B as it continues to recruit wirehouse reps)

Once the adviser transitions through the incubator, or breakaway, stage, TruClarity enters into what it describes as a strategic partnership.

That partnership is not a legal structure, does not include TruClarity taking any ownership in the RIA, and doesn't require any use of the TruClarity brand.

Instead, fees are customized based on the size and need of the RIA, and the firm keeps new RIAs under an initial three-year contract.

Ms. Stross, along with chief executive Darian Johnson and company president Craig Butler, realized ownership was not necessary for the model to work.

“We came to understand that ownership was not important to us, but ownership was important to the advisers,” Ms. Stross said.

In addition to Mr. Pietzak, TruClarity helped launch Las Olas Capital Advisors in Fort Lauderdale, Fla., in August 2015, and One Seven in Cleveland in July 2016. Each of those firms manages about $400 million in client assets.

Ms. Stross admits TruClarity's expansion has been “intentionally on a slow growth pattern as we continue to tweak our model.”

However, she said they will be launching a fourth RIA office later this month in the Northwest, and another launch is already planned for March.


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