Continued Growth Leads to Need for More Autonomy
HMC Partners’ secrets to success have been persistent and consistent singular focus on all of our clients. When John and I elected to become a fee-only advisory firm over 16 years ago, the decision was made in order to bring complete objectivity with our investment choices. Changing our business model from a transactional entity to a fee based one assured that our decisions were truly impartial. In 2005, when we elected to move our broker-dealer relationship from Princor to LPL Financial, we made that move because independence allowed us the freedom of portfolio architecture and a culture within LPL Financial of superior investment research versus a broker-dealer built to enhance insurance first representatives.
Over the last 9 years, we have continued to build a firm with a “service first” mentality and due to consistent growth and extremely high retention of clients, we have new needs in our evolvement. These needs are additional services to our existing clients; the need to bring in experienced advisors, and the possible acquisition of other businesses who want might want to be a part of the HMC model.
On February 15, 2016, we will be moving our Registered Investment Advisor relationship from LPL Financial to Independent Advisor Alliance (IAA). LPL will remain our broker/dealer, custodian of your assets and will be the record keeper as they always have been. The movement of the RIA relationship will help us greatly with IAA’s flexibility of how we elect to compensate advisors who join our firm and opens doors to other advisory businesses we might acquire.
John and I are starting to field more and more questions from current and prospective clients about succession planning within HMC Partners. As much as we hate to admit it, we are no longer considered “Spring Chickens.” A movement to IAA provides us more flexibility too in this type of planning. It will insure that HMC Partners can move to the next generation in the distant future and will allow us to continue to attract younger clients.
We look forward to this new and exciting phase at HMC Partners. As always, our decisions are made with our clients’ needs first. By making this move, we have provided a means to bring many of you more services that we could not provide in the past, while providing a smoother way for HMC Partners to move to the next generation many years from now. As always, please call or email with any questions (and see the Frequently Asked Questions below) and thanks so much for your continued friendship and trust.
Frequently Asked Questions
What is a Hybrid RIA? The hybrid Registered Investment Advisor (“RIA”) business model allows us to manage our advisory business under the Independent Advisor Alliance (IAA) RIA while maintaining our relationship with LPL Financial, the broker/dealer that will continue to act as custodian for investment assets.
Who is IAA? As a successful independent advisor and entrepreneur, managing day-to-day business operations can take time away from serving clients and growing a practice. It was with these challenges in mind, that Independent Advisor Alliance was founded in 2007. The mission of IAA is to provide its affiliated advisors with a broad range of customized support services designed to optimize efficiencies and ease operational burdens. IAA , now the largest hybrid LPL branch office located in the Carolinas, based on assets under management and client base, serves more than 50 independent LPL financial advisors and continues to add to its expanding regional base.
Robert Russo, Founder and CEO of Independent Advisor Alliance, has been acting as an OSJ (Office of Supervisory Jurisdiction) since 2007. Robert is a member of LPL Financial’s Executive Council, which comprises the top 1% of its advisors based on total gross production. In 2012 he was named LPL Advocate of the Year and in 2015, he was named among InvestmentNews “40 Under 40.” He currently supervises more than $1.5 billion in assets.
Our affiliation with IAA will allow us, at HMC Partners, the ability to focus solely on financial planning, asset management and providing exceptional service to our clients.
What does this really mean? The hybrid RIA platform allows our firm to operate more independently, giving us the ability to make decisions based on our own internal policies and best practices which are focused strictly on our clients.
We will continue to hold ourselves to the high standard of having a fiduciary responsibility to our advisory clients and act in their best interests. We will continue to have discretion with the investments in your accounts which will now include stocks. Also, LPL Financial will continue to offer us custodial, operational, technological, and research support. Currently, Gib acts as our company's OSJ (Office of Supervisory Jurisdiction, essentially a branch manager) which means he serves as the supervisor of our advisory business. Day to day compliance is time-consuming and onerous. Robert Russo is the owner of IAA and he and his compliance team will legally serve as the OSJ for us freeing up more time for me to do what I enjoy doing...meeting with you and managing your accounts.
Will the business name change? No. We will continue to operate as HMC Partners, LLC. However, instead of having investment advisory services as well as brokerage/custodian services offered through just LPL Financial, now investment advisory services will be offered through IAA and brokerage/custodian services through LPL Financial.
Is anything going to change with my accounts? No. LPL Financial will continue to be the custodian of your accounts and will provide you with the detailed audited account statements and trade confirmations, as well as continued SIPC insurance coverage, etc. You will continue to receive monthly and quarterly statements from LPL Financial (even your account numbers will remain the same), can still use checkbooks previously issued by LPL Financial, and there is no personnel change at all. One change you may notice is name of account programs. For instance, if your investments are held within a Strategic Asset Management (“SAM”) account (which is the case for the majority of our clients), it will now be named a Strategic Wealth Management (“SWM”) account.
What will I need to do for this? We will send you the LPL Financial paperwork (a page or two, typically) as well as an advisory agreement with IAA. There will be a postage-paid envelope included for you to mail the paperwork back to us after it is completed, signed and dated by you. Please be sure to read through all materials you receive. We will also offer some opportunities to come to our office and sign the paperwork in person. More details on this to follow.
Will any of the fees or charges increase on my accounts? No. Fees will not change as a result of this conversion. However, we were able to secure an agreement from LPL Financial that they will now waive their $40 IRA fee normally charged to our clients each year.
When will this happen? The big day for the conversion is Monday, February 15, 2016. The conversion will not cause any interruption in the services you receive from HMC Partners or LPL Financial.
If you still have questions, please call our office at 336.544.6800.