Jumping from UBS to go RIA was a ‘wonderful trip’: Questar Capital Partners

Between them, Questar Capital Partners co-founders Richard Reyle and Gerry Spitzer had racked up decades in the wirehouse world until, four years ago, they decided to take the plunge and go independent.

And it has clearly worked out - the Paramus, New-Jersey based wealth management firm has grown its assets under management from $800 million when it left UBS to $1.3 billion today.

So, how did it happen? Reyle compared himself and Spitzer to wirehouse “lifers” in an interview with InvestmentNews, explaining that they had been at Merrill Lynch for 20-plus years, before jumping to UBS in the wake of Merrill’s 2009 merger with Bank of America.

But, to quote the Fleetwood Mac classic, in 2022 they took the decision to “go their own way.”

“I think we just saw more and more the limitations that were placed on us as far as we’re only allowed to use certain UBS investments, we’re only allowed to use the ‘approved’ software from UBS,” Reyle said.

Ownership and succession were also part of the decision. “Running the business and building this big book of clients, I don’t own anything [at UBS] - I walk out the door, that’s over,” the Questar co-founder explained. “Where now I own a business that ultimately I can sell.”

With regard to the future, Reyle wants to keep the company in the hands of its employees. “When Gerry and I step down Questar is not going to go away, there’s a real business there that we’re literally building out the next generation of leadership for Questar,” he said. “And that’s just not possible in a wirehouse.”

It makes sense that Questar’s next-generation leadership is front of mind for Reyle. Succession has emerged as something of a ticking time bomb in the financial advice industry. Some 67% of the RIA leaders surveyed in DeVoe & Company’s latest annual RIA M&A outlook  cited succession planning as a major issue, up from 62% a year earlier.

But while the average age of a family office principal is 68, according to data from Deloitte Private, only 22% of respondents in DeVoe & Company’s report said that the next generation can afford to buy them out.

Set against this backdrop, Reyle told InvestmentNews that, in a wirehouse, it can be difficult to compensate people and keep them motivated. But, as an RIA, he has been able to give them equity in Questar. “They have an ownership in the firm, just like I do,” he said.

“In my case, honestly, I have a younger group of advisors on my team,” Reyle explained. “I will mention one name, [financial planning specialist] Mike Stabinski, who is 20 years younger than I am, so he’s going to run the firm - Questar is going to outlive me.”

As for the actual move from UBS, Questar brought about 92% or 93% of assets over and a 5-strong team of Reyle, Spitzer, and three support team members. The company’s workforce has since grown to eight people, and will soon number nine, according to Reyle.

Reyle and Spitzer have chosen a supported RIA model, helped by Sanctuary. “When you have been in a wirehouse your entire career – everything from picking out real estate, all that stuff that you’re not an expert in,” he said. “[Sanctuary] have the people in place to help you deal with the technology, real estate - so you totally focus on getting your doors open and getting your book moved, just doing all the right things for the client. And all the ancillary stuff they do a good job with.”

He described building the company’s tech stack as one of the great advantages of the RIA move. “I don’t want to talk too negatively about the wirehouse world, but they have to manage to the lowest common denominator,” he said. “They are never on the cutting edge of technology.”

In contrast, Questar has adopted a lot of cutting-edge AI software, from notetaking to Holistiplan, which scans 1040s to give clients “look-forward tax strategies,” from Roth conversions, to ways to minimize taxes in the coming years.

Away from tech, the wealth management firm offers securities through Sanctuary Securities and advisory services through Sanctuary Advisors.

Questar chose Charles Schwab as a custodian. “Clients get the safety and security of a gigantic custodian like Schwab and all the technology that is behind them,” said Reyle.

This framework has underpinned Questar’s growth, most which has come from doing Employee Stock Ownership Plans for clients. “There’s a lot of businesses out there that people have worked their entire lives building,” he said, noting that this could be, for example, a plumbing supply company. “Their kids don’t want to be in the business - [the owners] are selling their companies to their employees, walking away with real money in their pockets.”

Ultimately, Reyle feels that the move to RIA has more than paid off, on multiple levels. “The pay is better, but if that wasn’t even the case, there would be no doubt this is a much better thing for advisors and, most importantly, for their clients,” he said. “You’re really able to be very client-focused and focus on the stuff that’s important to clients and to your relationship with your clients.”

“It has been a wonderful trip,” he added.