One RIA's 'biggest mistake' when setting up shop

When Brian O'Neill decided to set up his own registered investment advisory practice, he hired compliance consultants to help him file his SEC registration
MAR 28, 2011
When Brian O'Neill decided to set up his own registered investment advisory practice, he hired compliance consultants to help him file his SEC registration. When they told him that it would take 45 days for the Securities and Exchange Commission to approve the registration, he assumed that it would take that long. That turned out to be a bad assumption. “The biggest mistake was leaving it up to compliance consultants to keep me posted on my registration,” said Mr. O'Neill, founder and president of Cahaba Wealth Management Inc. The Atlanta firm manages $73 million in assets. In late 2009, as Mr. O'Neill prepared to part ways with his old firm, Creative Financial Group, a number of client accounts were left dangling as he waited for his official resignation date of Nov. 16. “From an operational standpoint, I had a fiduciary duty to my firm, and I couldn't do key things until I resigned,” he said. “I couldn't register with the SEC until I left, and so there was a period of time before I could even transfer a single account. My clients were in limbo, and it cost me time and revenue,” Mr. O'Neill said. And to make matters worse, the consultants told him that it would be early January 2010 before he heard from the SEC. On his own, Mr. O'Neill checked on his registration Dec. 22 and discovered that it had been approved Dec. 7. “We could've been moving investment accounts over way sooner,” he said. “The consultants didn't check, and I had left it up to them.” The rocky road to independence came with some smart choices. Among them, Mr. O'Neill said, was the choice to drop his securities licenses and join up with Fidelity Investments as his custodian. “I gave up some revenue, but I would have been giving it back to a broker-dealer. It was always a challenge because I was an RIA for a client but also a broker,” Mr. O'Neill said. “We'd have a management account, but also custody with a mutual fund and a trail,” he said. “I was happy to drop that conflict.” The certified financial planner designation is also a big deal to Mr. O'Neill in the everyday course of his business. “It's the lead,” he said. “Investing is secondary to financial planning. When I manage money for clients, I don't do it without doing financial planning work for them first,” Mr. O'Neill said. E-mail Darla Mercado at [email protected].

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“I was astonished when sitting down with the [registered investment adviser] folks at Fidelity and seeing the technology they had put together, and the cost was nowhere where I thought it would be. They have a suite of technology and services that are really low cost — not less than I thought, but low cost — and I realized I could do this. The cost is really important for a small-business owner.” Brian O'Neill

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