How to Create a Smooth Breakaway

Newly formed Orgel Wealth Management, with $4 billion in assets under management, is redefining the process of going independent.

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Mark Orgel, who founded the 23-person Altoona, Wis., firm, orchestrated an unusually amicable parting of ways with his former employer, RBC Bank, says Mark Tibergien -- CEO of Orgels new custodian, Pershing Advisor Solutions. The transition offers a stark contrast to the often-contentious separations that occur when advisors leave employers.

About 90% of the time when brokers leave, the news comes as a surprise to their employers, Tibergien says -- but in this case, both the Orgel folks and RBC were very classy, transparent and professional in their dealings with each other. This says a lot about how they run their business.

Orgel and his colleagues worked closely with RBC to smoothly transfer all of their 800-plus client accounts to Pershing, in a process known as tape-to-tape. Of the 80 to 90 RIA breakaways that Pershing brings on annually, only about four to five are sufficiently amicable to use the tape-to-tape process, Tibergien says.

We leverage this process for large conversions, according to Tibergien, when there is agreement between both firms to reduce manual input, errors and -- most important -- provide exceptional service to the end client by delivering a smooth transition of their account and assets.

WEEKEND TRANSITION

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When the markets closed on Friday, Oct. 11, all of the clients assets were at RBC -- but when the markets opened again on Monday, Oct. 14, all but a few had transferred over to Pershing, Orgel says. In other breakaways, this process can take days or months for some accounts and risk interruption to client services.

Orgel says he made the decision after many years with RBC. Although he was largely pleased with the relationship -- in fact, he says his longstanding relationship with the bank was what made it willing to work collegially with him on the split -- he says his firm had grown to the point where he needed more freedom to make strategic decisions, such as passing on equity stakes to successors.

It was really practice-level autonomy and the need for employee ownership that caused us to do this now, Orgel says. We wanted the opportunity to independently manage our business, in terms of hiring people and branding, etc. Its easier to do that when we control our own income and balance statement. That became more critical as we grew.

Another significant lure was the desire to become 100% fee-only.

Our practice has been predominantly fee-based for more than a decade, Orgel says. Now [it is] more than 98%. Firm advisors securities licenses will expire in two years, Orgel adds.

He says he chose Pershing in part because of the "philosophical fit, but also to get what he thought would be the easiest move: The biggest thing was the tape-to-tape transition.

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Ann Marsh