Breaking up (an advisory firm) is easy to do?

Fox, Joss and Yankee share the details of their amicable split

Jun 9, 2015 @ 11:35 am

By Liz Skinner

Three advisers who have lived through both bitter partnership breaks and now an amicable one said the latter is worth the time and effort because it's easiest on clients.

A year ago FJY Financial co-founder Dan Joss left the advisory firm he, Marjorie Fox and Jon Yankee formed nine years ago after the trio split from financial planning firm Rembert D'Orazio and Fox. That first breakup with Rembert was acrimonious and included years of bickering over clients.

So when Mr. Joss decided to leave because of personal and professional reasons last spring, the trio vowed to make sure things went more smoothly.

“Our goal was to make it as least disruptive for clients as possible,” Mr. Yankee said last Thursday in a meeting with the three original partners at FJY Financial's headquarters. “We had strategy sessions and hired a public relations firm to talk about how to do that.”

(More: Breaking up is hard to do)

The advisers agreed that Mr. Joss and Ms. Fox would approach clients on a call together and let them choose whether to follow Mr. Joss or remain with FJY Financial. On each client call, the two alternately pitched their services without saying anything negative about the other. They gave clients about a month to make their choice.

Mr. Yankee, who didn't have any joint clients with Mr. Joss, made calls to alert the firm's other clients about the partner's departure.

About 25 of the firm's approximately 240 relationships decided to follow Mr. Joss to Covenant Wealth Advisors. Both Mr. Joss and Ms. Fox said they ended up being surprised in some cases with the decisions clients made — in both directions.

“Some clients I would have liked to have stayed followed Dan, and that made me a little sad, but that was part of putting clients first,” Ms. Fox said.

Some clients were unhappy they had to choose either the firm or Mr. Joss, and a few even decided on neither. A couple of Mr. Joss' clients also chose not to go with him (nor to stay with the firm) because they were worried about his relocation nearly 200 miles away to Williamsburg, Va. from Reston, Va., near Washington, D.C., she said.

Under the agreement the partners worked out, Mr. Joss compensated the firm for clients who came with him. When clients stayed with the firm, its value increased Mr. Joss' partner payout. These terms have now been written into the firm's partnership agreement.

As with any deal, there were challenges.

The loss of Mr. Joss created capacity constraints for the other partners, who believe lead advisers should have at most 60 to 70 relationships, ideally. Mr. Yankee's client load swelled into the 90s for a time and Ms. Fox began working more hours again, after starting to reduce them as she headed toward a 2022 retirement.

Ultimately the firm hired another experienced adviser and two other young professionals to help with the workload. Around the same time, FJY Financial made adviser Laurie Belew a partner and acquired her father's Midland, Tex.-based advisory firm.

Ms. Belew's father, Larry Adams, who mostly manages money, became a fourth partner in FJY Financial after that transaction closed. Ms. Belew moved to work in Midland, Texas, though she still handles many long-time clients by traveling back to the Washington region a few times a year, Mr. Yankee said.

Thanks to the client assets gained in the acquisition of Mr. Adams' firm, FJY Financial's asset level after Mr. Joss left remained about the same for last year. Now it has grown to about $423 million in assets and about 305 client relationships.

For Mr. Joss, he's making another move, but staying in Williamsburg.

He's in the process of leaving Covenant Wealth Advisors and creating his own firm. Most of his clients are following him again, but one who didn't want to work with a solo adviser is actually returning to FJY Financial, Mr. Joss said.

Mr. Joss left FJY Financial because he and his wife decided they wanted to live full-time at their Williamsburg vacation home, and to allow him to do more life planning with clients. He was trained at the George Kinder Institute of Life Planning in 2008.

FJY Financial practices holistic financial planning, but its process doesn't include the deep conversations to help clients uncover their aspirations that life planners practice, Mr. Yankee said.

Mr. Joss would not say what happened to make him decide to form his own solo firm this year and leave Covenant Wealth Advisors.

“You can't ever know the future,” Mr. Joss said. “You try to plan for the ideal but you have to be willing to accept whatever happens.”

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