Why affiliating with the right broker-dealer makes a big difference

Two years after their regional firm, Piper Jaffray & Co., was bought by UBS AG in 2006, Wayne Wagner, Scott Stoltenberg and Laura Swift came to the conclusion that their Davenport, Iowa, practice just didn't fit in with the global giant. They left UBS in October 2009 and affiliated with Chicago Investment Group LLC, an independent broker-dealer with a focus on investment banking. A former Piper colleague recruited them to Chicago Investment, but last June, the firm closed due to a net-capital violation. That's when the three partners formed Quad Cities Investment Group LLC, an independent advisory firm.

EASY TRANSITION

Fortunately, Chicago Investment had cleared some business through Raymond James Financial Inc., so Quad Cities was able to make a relatively easy transition and affiliate with Raymond James Investment Advisors. The lesson learned, Mr. Wagner said, was the importance of “associating ourselves with a quality company” and getting the right advice about going independent. Quad Cities manages about $100 million in discretionary assets and another $10 million in bond portfolios at Silver Oak Securities Inc., a broker-dealer. Before they could make the transition to their own advisory firm, though, the team faced another hurdle. Their business was about 40% fee-based, and to become a truly independent RIA, the partners had to convert the rest of their clients into advisory accounts. “That was a bit of a sell for clients,” Mr. Stoltenberg said. But the team explained that they could manage money better and more fairly on a fee basis, and that the efficiencies they would gain would free them up for more financial planning and client contact. The Quad Cities partners now think they can make it easier for others who want to leave bigger firms. “We're looking forward to hiring other brokers who don't necessarily want to open their own offices,” Mr. Wagner said. E-mail Dan Jamieson at [email protected].

BEST ADVICE:

“Don't be afraid to pick up the phone and call other people who have done this.” Scott Stoltenberg