When Repp Lambert started at Northwestern Mutual about 28 years ago, he focused on insurance and was only “dabbling a little bit in the investment world.” Fast forward to the start of this year, and he is the co-founder of a planning-centric, multi-generational registered investment advisor with $260 million in client assets custodied with Charles Schwab.
The journey to forming Virginia Beach, Va.-based Altura Wealth had its share of twists and turns, including rebuffing offers from broker/dealers and RIA aggregators. Ultimately, Lambert and his partner (and one-time intern) B.J. Crook realized that their practice had changed enough over the years to adopt the RIA model as the best fit.
“We started kicking the tires, and me being about 55 years of age at the time, and him being about 35, we started asking, ‘What is our best business model and our highest growth orientation?’” Lambert said. “The assets under management were growing rapidly, and insurance was becoming less of the revenue.”
According to a recent advisor survey by Cerulli Associates, Lambert and Crook represent a minority of advisors who say they are either unlikely (5%) or undecided (8%) as to whether they will stay at an insurance brokerage. Those figures, while relatively small, are larger than for advisors at independent RIAs, where 1% are unlikely to stay, 1% are somewhat unlikely to stay, and 3% are undecided. (The wirehouse world, for its part, had a low percentage of those unlikely to stay at 1%, and only 3% were somewhat unlikely to stay, but a sector-leading 22% said they were “undecided” remaining.)
For Lambert, it took decades before he shifted into the breakaway mindset. He told Wealth Management he had been doing well at Northwestern Mutual, with a mix of insurance and advisory work, growing his team, winning books of business from colleagues, and boosting assets under management to north of $200 million.
Much of that success he attributes to bringing on Crook, first as an intern to help with client paperwork and administration, and then as a full-time employee in 2009. Crook’s focus quickly turned to investing and planning, and in 2014, he earned his CFP, followed by additional wealth management designations from the American College of Financial Services.
During this time, the firm landed business from Northwestern Mutual advisors that didn’t otherwise have a succession plan. One was focused on military clients, and the other on the medical market.
“We always led with planning and just started putting plans in front of these clients and transitioning them from brokerage to advisory,” Lambert said. “We were really capturing more assets by doing comprehensive planning.”
Crook said the practice initially used Northwestern Mutual’s turnkey, signature portfolios with clients. When they got the new books of business that included more asset types, they took a more proactive approach by using the firm’s signature choice program, which enabled more advisor decision-making.
“We started to really refine our skills on being thoughtful around the portfolio and tax strategy as opposed to just gathering it and putting it in the model and letting the home office handle it,” he said. “We saw that shift where we were actually moving a lot of signature portfolio accounts over to Sig Choice over the last several years.”
The team had also grown to six people, and Lambert and Crook started considering the shift their practice had undergone. They were still getting compliance, technology and marketing from their relationship with the Milwaukee-based insurance broker. But they were also relying less on the investment research and still had to meet insurance sales expectations to maintain their compensation structure.
“In taking on that fiduciary role in the advisory space, we started doing a lot of fee-for-service,” Crook said. “And we were taking very seriously that people are paying us for our time, our expertise and our advice, not for sales of a proprietary product. I think that was the straw that broke the camel’s back.”
According to that Cerulli report, 11% of advisors considering a move cite reducing exposure to proprietary products as a major factor, 28% put it as a moderate factor and 61% say it is no factor at all.
Lambert and Crook weren’t sitting in a vacuum when considering a move. They were contacted by a national broker/dealer and then an RIA aggregator. They considered the options (and paychecks), but Crook said they were concerned about “going from the frying pan into the fryer” with another firm.
Instead, Altura started working with Brad Wales, the founder of Transition to RIA. He provided a checklist to help them get started with their own RIA and offered advice throughout the process.
After the decision was made, much work followed to set up the RIA. Crook said it was “exhausting at times,” but that Wales and other resources in the RIA sector made it “not as cumbersome as you might be made to believe when you’re in that broker/dealer world.”
Lambert credits Crook with doing a “tremendous amount of due diligence” for the move. That included working on the firm’s tech stack and helping to decide to go with Schwab for custody after considering other providers, including lower-cost, tech-focused Altruist.
In the end, Altura was able to transition about 99% of its clients and their assets in about 90 days.
The pair is now focused on running with the new setup. But Lambert said he could see bringing on more business in the future.
“We feel we have more capacity and we’re just quite frankly able to do so much more for clients,” he said. “At a point in time in the future, if it’s conducive and it’s the right advisor, the right clientele, we see ourselves looking at purchasing some other practices.”
