Q&A talks with Gerald Goldberg, CEO and co-founder of West Hartford’s GYL Financial Synergies, which recently renamed itself and split away from the independent arm of Wells Fargo Advisors.
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Q&A talks with Gerald Goldberg, CEO and co-founder of West Hartford's GYL Financial Synergies, which recently renamed itself and split away from the independent arm of Wells Fargo Advisors.
Q: Your firm Goldberg, Yolles & Lepore Consulting Group recently decided to split with the independent brokerage arm of Wells Fargo Advisors and rename your firm GYL Financial Synergies. Why make this move?
A: More and more of our clients, as well as others giving consideration to engaging GYL Financial Synergies, indicated they would prefer to do business with us as an independent Registered Investment Adviser (RIA). Responding to this preference along with wanting to have access to an expanded platform of investment strategies and technology were some of the reasons for our decision.
Our partnership with value-added investor, Focus Financial Partners, also gives us access to thought leadership as well as capital to execute our growth plan.
Q: You recently told the Wall Street Journal that this move was partly a reaction to a new federal rule set to take effect in 2018 that will place stricter standards on the advice financial advisers provide to clients. Why is this new rule change so significant?
A: When the new regulations are fully implemented the fiduciary standard of care that is applicable to qualified retirement plans and to RIA firms will be applicable to advice provided by advisers affiliated with broker-dealers to clients relating to their Individual Retirement Accounts.
Distilled down to its essence, the fiduciary standard requires that an adviser put a client's best interests first. While the fiduciary standard is already applicable to RIA firms, it would replace the “suitability” standard of care that is currently applicable to advice provided by advisers affiliated with broker-dealers. Suitability merely requires that the investment recommendation is suitable for the client but it does not have the same limits in place that the fiduciary standard has, such as the requirement to avoid conflicts of interest with the client.
Industry experts have suggested that this will result in a significant curtailment in commission-based business in favor of more transparent fee-based advisory relationships. Since many broker-dealer firms still derive a substantial amount of revenue from commissions, when fully implemented this could have major implications for broker-dealer firms and the advisers who affiliate with them.
The business practices of all involved will have to comport to the new standard of care applicable. This will result in both clients and advisers looking for independent fiduciary firms that have a clearly articulated value-added proposition.
Q: Your announcement says you're looking to grow through mergers and acquisitions. What types of firms are you looking to acquire? Is there a particular geographic region you'd like to expand in?
A: Our acquisitions will be governed by not only wanting to do transactions that are accretive to earnings but more importantly as part of our broader talent-acquisition strategy. We want to attract advisers and investment professionals that are not only capable but also subscribe to the same ethos and client-centric philosophy that is our guiding light at GYL.
Although we are not geographically constrained and have clientele as far west as Hawaii, it is likely that we will first focus on acquisition activity within our existing footprint where we have a high concentration of clientele. This translates to us being particularly interested in firms from Connecticut to Maryland. Of course if an extremely attractive opportunity presents itself outside of that area, we are open to giving it consideration.
Another important component of our growth relates to our ability to provide and facilitate succession planning for advisers who currently do not have a plan for their clients when they retire or if something happens to them. With the average age of advisers in the industry being above 50 years, this is a critical issue that needs to be addressed.
We enjoyed a very good working relationship with Wells Fargo. At the same time, the industry is rapidly evolving. Going independent enables us to partner with Focus Financial Partners and provides us with an opportunity to take our practice, service and support of clients to the next level.
Q: There are a lot of financial advisory firms in Greater Hartford. Is that market oversaturated? What's your targeted market/customer base?
A: The principals at GYL have been working with clientele in the Greater Hartford area and beyond for the last 20 years. The presence of other advisory firms has not been an impediment to our growth. Consistent with my comments regarding our ability to be able to provide transition planning for other advisory firms, we anticipate there being consolidation in the industry. It is likely that consolidation will occur locally as well.
As for our target market, we work with large and small institutions as well as high net worth private clientele. We assist defined-benefit and defined-contribution plan sponsors in meeting their fiduciary responsibilities relating to the prudent investment of plan assets. As for private clients, we help them navigate critical financial events so they can concentrate on enjoying life and living it on their terms.
