Financial Advisor IQ – Team Leaves JPMorgan Unit to Build a Better Platform
Advisor David Steele left J.P. Morgan Securities — a business unit that parent-company JPMorgan Chase had acquired when it bought Bear Stearns in 2008 — after 19 years, on Friday, to start One Wealth Advisors in San Francisco. Joining him at the independent RIA are his brother, Jonathan Steele, and another ex-J.P. Morgan advisor, Alexander Schmitz. Their five-person team managed $300 million as part of the bank’s broker-dealer unit.
Q: What prompted your move to independence?
A: I was comfortable with the platform we had at Bear Stearns, and then at J.P. Morgan after it was acquired as a result of the financial crisis. So I was skeptical for years about the advantages of breaking away.
Q: What changed your mind?
A: After talking to former colleagues and reading article after article about advisors breaking away, I became more aware of the advantages of developing our own platform using third-party solutions now available to our clients through independent channels. As we did more due diligence into best-of-breed services over the past several years, it turned out to be a real eye-opening experience.
Q: Could you explain what you mean by platform?
A: The single biggest reason why we decided to leave was the ability to create a platform that comprised components that were chosen purely on merit — not the legacy systems of a big multi-national bank. To be specific, we’ve chosen what we think is the best custodian, Fidelity. We’ve also used our new freedom to pick Callan Associates to help us analyze various investment options, including top fund managers and alternative investing opportunities.
Q: How has your technology changed as an independent?
A: We’ve been able to choose the best client interface through Envestnet. The whole experience is just more intuitive for clients than what we had before. And the analytical tools that we can apply to portfolio analysis and performance reporting are second to none. We’ve also brought in Dynasty Financial Partners to provide a lot of other front-, middle- and back-office services. As a big firm, Dynasty gives us better pricing power. But it also lets us take advantage of a huge selection of third-party products and services.
Q: You’ve got many other varied business interests, right?
A: I’ve created two other companies. One owns seven different bars and restaurants, and the other owns yoga studios. I’m also a partner in a firm that promotes and produces music festivals. But the vast majority of my time is spent at One Wealth.
Q: How do these other pursuits feed into your advisory role?
A: I see these other pursuits as being very similar to my role as an advisor. That is, I have to establish goals and objectives for each business along the lines of a very structured process that we perform for our private-wealth clients. Also, I find that my outside entrepreneurial pursuits help me to develop more empathy for our clients, who mainly work in entrepreneurial environments themselves.
Q: Does being an outside entrepreneur help in finding new clients?
A: It absolutely does. Since I understand how to create and maintain a business, our practice can now offer a full range of business-consulting services. As an independent, I’ve got more freedom to develop multi-dimensional relationships with clients that cut across both personal and professional planning issues.
Q: How has your compensation changed?
A: This move wasn’t done to line our own pockets. In fact, we turned down a substantial signing bonus from another large bank to start our own firm. We’ve put a lot of our own money into building a robust platform, and most assuredly we will continue to invest any excess cash flow back into keeping our practice evolving for our clients. We’re also looking forward to using our freedom as an independent to invest as we see fit in the services and products that can best help our clients in the future.
Q: What would you recommend to other advisors thinking about breaking away?
A: It takes a real entrepreneurial spirit to create something of your own. Also, if your clients run the gamut and you’re more of a generalist, then you might not have enough time going independent to run your own business. But for practices where advisors have a very focused client base, creating a better product and service platform for clients can make a lot of sense.