Two planning firms that focus on serving the nation's airline pilots have teamed up to form an RIA with $2.3 billion in assets under management. The RIA will be housed under the Retirement Advisors of America brand.
According to John Bentley, CEO of Dallas-based Retirement Advisors, the deal provides a succession solution for two of the three partners of Advisor Financial Services of Woodstock, Ga.
Advisor Financial partners sold their practice to the larger firm, which is about one-third owned by the private equity firm HBC Investments in Dallas. Terms of the deal were undisclosed.
"We have been friendly, respectful competitors for nearly 20 years," says Bentley, who left the private equity fund he cofounded, Grayhawk Capital, to join Retirement Advisors in 2010.
Advisor Financial brings $500 million in AUM to the newly formed firm, Bentley says.
In a statement, Advisor Financial founder and managing partner Carl Youngdale said that the merger would ensure "ongoing stability, support and continuity for our clients."
Youngdale and fellow partners Jeff Baumert and Gary Krasnov are veteran Delta Air Lines pilots, whose flight itineraries allow sufficient time to run their practice.
While there are perhaps 15 to 20 firms nationwide that focus on the airline industry, Retirement Advisors and Advisor Financial are unique in that their clients are predominantly pilots, Bentley says.
80% PILOT AUM
The vast majority of Retirement Advisors' clients are pilots, and its success has largely derived from the high level of customization it offers.
For example, after American Airlines filed for bankruptcy in 2011, its pilots received stock in the reorganized airline, Bentley says. That stock was treated as ordinary income and taxed accordingly.
Later, however, Congress allowed it to be reclassified as a nontaxable distribution, based on an earlier precedent from Delta Air Lines’ bankruptcy six years earlier.
"We are all over that," Bentley says. "We assisted our clients in amending their tax returns to recoup about $25,000 in taxes."
About 80% of Advisor Financial client assets are derived from pilots, Bentley says, adding that flight attendants and other airline employees comprise roughly 20% of their clients.
When it comes to marketing perks, Retirement Advisors also provides a free beer to its pilots after they clock off of work and await connections to their home destinations. Periodically, the firm also pays for pilots’ overnight stays in hotels during legs of travel not covered by their employers.
"We are totally committed to doing what is best for the airline community," Bentley says. "That is why [the two firms] were attracted to each other."
- Want to Foster Growth? Study Client Demographics
- How to Engage Advisors for a Better Team
- Working with Accountants Can Lead to Referrals