Wealth advisors strike out on their own

Here’s a trend to watch for small businesses around Richmond that handled projects from the now-departed Wachovia Securities: Wealth advisors continue leaving big banks and investment firms to run their own wealth management businesses. And most of their investment approaches are similar: trying to help wealthy clients find steady returns. That means likely no home runs, but hopefully no blow-ups, either.

And their independence is a big selling point as they try to pick up clients with more than $500,000 to invest.

“People want to deal with a decision maker, not the salesperson who has to check with a sales manager and then check with the people at headquarters,” said Sean Gibson, who left BB&T in 2008 and recently started Gibson Volatility Management.

Gibson’s company uses hedging to try and limit the potential risk or downside of certain investments. He previously had a company with two partners, which he is no longer part of.

“We have no pressure from anyone at a bank or brokerage firm telling me what I need to sell or what quotas to hit,” he said.

Gibson said he uses his trading background, including a time selling option in San Francisco, to aim for above average growth potential with less risk.

Gibson Volatility Management, which has an office in Innsbrook, has just under $10 million under management, he said, with 10 clients. The firm also works with foundations and endowments and with other advisors, and will start looking to hire a business development manager within the year.

One of the challenges for growing the business is using word-of-mouth marketing, Gibson said. “Even though I am very confident about my strategy and my expertise, we have to overcome the challenge of a relationship a prospective client has with a current advisor,” Gibson said.

But this is a good time to be wooing new clients. There are no statistics on how many clients change firms in the Richmond area. But on the national scene, around 30 percent of the world’s millionaires withdrew assets or left their wealth management firms in 2008, according to a study conducted by Capgemini SA and Merrill Lynch. Forty-six percent lost confidence in their advisors, according to the study.

Art Washburn and Craig Forbes left a division of SunTrust in May to start Alpha Omega Wealth Management. Like Gibson, they are looking for clients with $500,000 to invest.
Unlike Gibson, who invests in exchange traded funds, Alpha Omega picks some stocks for their clients’ portfolios.

But the firm does not hold the clients’ money itself, instead using Schwab as its brokerage. That means clients can rest assured that there are no Madoff-like hijinks going on, Washburn said.

“There’s been a move away from big firms that are not tied to a bank, or a brokerage firm,” said Washburn. “We’re totally separate from where the assets are held. We’re not a broker dealer.”

And one other start-up is entering the fray.

Celia Rafalko was formerly a managing director at Wachovia Securities, where she helped oversee investments for 1,500 advisors.

She didn’t want to move to St. Louis when the firm moved there, and recently she started Rafalko Investment Advisory. She has eight clients and works from her home right now, but would like to hire an employee soon to help run the business.

This is not her first business – she ran a consultancy in Russia in the mid-1990s.

Like Alpha Omega, she uses Schwab as her trading platform.

The timing is right to launch a new firm because clients are dissatisfied, she said. “It really speaks to how difficult it is for people to truly find somebody they have confidence in, and find a connection with, and can communicate with,” she said.

“Of course, part of that is clients being more realistic about what to expect now.”

Aaron Kremer is the BizSense editor. Please send news tips to Editor@richmondbizsense.com.