7 summers ago – The Reformed Broker Financial Advisor

Yesterday was the seventh anniversary of my company’s founding. Ritholtz Wealth Management.

I smile when I think of the many activities that started this summer and how clueless we were all about starting and running a business. It was hard work, stressful and there were always more questions than answers lurking around every corner.

A couple of things that came to mind while thinking about it this morning …

We lost our biggest customer a week before launch. Barry and I, and Michael Batnick and Kris Venne, had informed all of our customers that we were planning to leave the RIA company and start our own thing. Most of the time the answer was “over time!” or “I thought you would do this sooner or later.” The customer support was really important as the whole company was awful enough. It was like jumping from ship to ship in the middle of the sea, but we had to build the next ship while we were already at sea! Knowing everyone was ready to come was like a life raft to hold on to. And then one morning Kris answers a call from our only customer at the time worth over $ 10 million. He had recently sold a business with Goldman Sachs as an M&A advisor for the sale. And one of the things he needed (wanted?) Was borrowing money against his portfolio to fund something else he was doing. We were able to arrange third party loans at this point, but not well. Nowadays we do that all the time, but back then we were really inexperienced in this area. Goldman’s asset management unit rushed in and promised him the world. He said, “You know I love you guys, but I have to move my account to get the loans. So sorry.”

We weren’t mad at all, but it definitely wasn’t what we wanted to hear with the countdown clock running. I freaked out a little. Barry was like Whatever, in typical Barry fashion. He knew there would be dozens of large customers knocking on our door when we launched. I wasn’t as sure as he was. But that’s the nice thing about our partnership. I am the worrying one. Barry was right, thank God.

I also remember how wonderful TD Ameritrade Institutional was. We had lunch with the head of the East Coast Region, who had become a great supporter of ours, and told him our plans. He wanted to bet big on us too. With a phone call, he put all resources of TD’s institutional RIA custody business behind us. A whole transition team was ready. TD even mailed our Fedex and UPS envelopes to customers. It was so far beyond the help I expected that to this day I have never forgotten it. They were there for our customers and for us before we even existed. This is one of the reasons TD was our top choice as all things are the same as we have opened over a thousand new accounts over the years. I’m a little sad to see them join Schwab’s institutional business this fall when the merger is complete, but hopefully Schwab will keep the people we deal with there and maintain the exceptional level of service that made our relationship with TD so special.

Our first year everyone had to wear lots of hats. Barry had to find out the bills, banking relationships, payroll, and all sorts of other things he’d never done before. I had to become a PR expert and a fintech / software expert overnight as we had to make a million decisions between platforms and providers. Michael answered phones, processed deals, and rebalanced accounts in addition to all of the research he did. Kris was the customer-facing advisor for 100% of our accounts and responsible for integrating any new customers who came to us left and right.

I passed Kris one morning and said Congratulations! He said, “What for?” Well, I’ve just decided that you are now our Chief Compliance Officer too. “Oh my god,” he said. But he also took on that role and got the job done with the help of outside consultants until February of this year. The sheer amount and breadth of work we all did was unsustainable, so every dollar that came in had to be reinvested in hiring people. We found Patrick Haley, now our main distributor and CTO, and Erika Mauro, now our Director of Client Operations, shortly after we launched this year. Without them the ship would not have sailed. To date, we have not made any major operational decisions without their input.

When starting a business in Manhattan, finding an office to rent is not easy unless you have lots of money to store. We didn’t do it. But we found a really simple and cheap sublet at 90 Park Avenue that had four offices taken over by a consultancy that had an entire floor that they didn’t use. This included access to their huge conference rooms, which made us look much larger than we did for our meetings. Our offices were tiny, but we hardly cared about them because every day was so full of activity that we didn’t have time to think about our surroundings. The New York Times sent a reporter to us in our natural environment. He had to put us in the hallway to take a picture because none of our offices were big enough to fit us all in the picture. I was a little embarrassed at the time. The article was the front page of the New York Times division. The day after it came out, I hired my friend Alyssa, the commercial RE broker, to find us our own office space. Time to grow up.

One final reminder – the pouring of support and love from social media and financial blogs has been amazing. If you take a big leap and risk it all, it means the world to have well-wishers and people who really want you to be successful. So when my friends bring out new things, I try to give them this support and encouragement. I know what it’s like to need it.

A lot has happened since then and things have gotten easier. But like many founders I hear speaking in podcasts and interviews, I don’t remember the particular difficulties or stresses of these days. What I remember is the pizza and beer nights and the teamwork and the last minute savings and all the happy things that came together. Everything that is really close to my heart is what I remember well. Sometimes it feels like it all happened yesterday and sometimes it feels like decades have passed.

But that was 7 summers ago.

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