When the young Big 8 accounting firm veteran Mark Griege founded a Dallas-area planning venture in 1985, he had the entrepreneurial itch. He thought he had the goods to start his own business, but chuckles now that it might have been youthful enthusiasm talking.

His plan was simple enough: He wanted to fill the gaps he saw in financial advice given disparately by estate planners, insurance agents, tax preparers and stock brokers. His timing was very poor or very rich, depending on how you look at it. 

In the beginning, the price for following his muse was a few years of knocking on doors and having them slammed in his face. He was still in his late 20s, after all, and despite a law degree and a gilded resume with the name of Ernst & Whinney on it (precursor to Ernst & Young), many moneyed people likely saw a kid, he says. 

Also, this was Texas circa 1986. Just mention that year in the Lone Star State, and it gives some people the shakes. 

It was right before an oil glut caused the crash of crude prices, while real estate values plunged in a vicious cycle amid tax reform on the eve of the savings and loan crisis. Most of Griege’s business relationships, he says, were in industries that were about to get a major shellacking—land and energy. These two tornadoes met on the plains of Texas and, according to some historians, practically destroyed the state’s banking industry.

Yet here it is, 30 years later, and Griege and his partner Chuck Thoele just threw their 30th anniversary party for the firm, now dubbed RGT Wealth Advisors.

How they negotiated this path partly tells the story of the macroeconomics of the 1980s and the economic history of Texas. For his efforts, he and Thoele, another Ernst veteran, not only survived but thrived. The firm now lists both top executives and pro football quarterbacks among its clientele and some $3.5 billion in assets under management.

It was not a straight path.

Restless Hearts

Griege met Thoele in 1981 when both labored at the proto-Ernst as tax accountants. They spent their late nights during tax season dreaming up their own firm.

“We found a love of golf and sports and crazy ideas in common,” Griege says. “So we had a crazy thought that it would be great to be in business together one day and not necessarily be doing tax accounting work but to be doing something that serves people more directly on helping them achieve financial goals.” 

Griege’s early resume betrays his ebullient restlessness: After graduating high school in 1977, the son of a doctor, he worked through high school and college at Rich & Charlie’s Italian restaurant and the Pasta House, doing everything from waiting on customers to dishwashing and busing tables until he worked his way up to assistant manager. He also formed his own business operating ski tours (renting the buses and lift tickets and boasting 150 tourists on the last trip out). He invested in (and lost money on) South African gold stocks. A Missouri native, he was drawn to Texas (he went to Southern Methodist University) because it was still growing and full of young entrepreneurial types. 

He wrenched himself out of Ernst after a year or so to go to law school in ’82, but didn’t practice. “I wasn’t passionate about accounting, and I probably wasn’t passionate about law.” No, it was business that held all the charms. Following his instincts, he launched the prototype Robertson, Griege (with former partner Rex Robertson). 

After noticing a couple of local firms doing holistic planning work, his idea was to bring on portfolio management, garnering clients who could grow organically in promising careers, while he charged them a fee for services. It was a pretty compelling business model back in the ’80s, he says. It was strategic and long-term in nature and not transactional. You didn’t have to rebuild it every year with seasonal tax work. The revenue was sticky.

What he found at first was rejection. The business wouldn’t turn profitable for about five years, somewhere around ’89 or ’90, as the Dallas-like land and oil soap opera played out. By the turn of the decade, the Dallas/Fort Worth landscape was littered with see-through skyscrapers. 

Many of the firm’s clients were in those industries, and suddenly their assets were distressed. “Whatever liquidity they had was aiding other investments that required capital because of the swamp in those two markets.” So he was, on the one hand, charging a fee for assets that were plunging in value. “Then ’87 came along [when the stock market crashed] and they declined even further.” 

But there were signs the fledgling firm was winning some clients with big futures in Dallas. In 1989, it landed rookie Cowboy quarterback Troy Aikman, who would go on to win three Super Bowls and become a Hall of Famer.

Before Thoele joined in 1991, Griege’s largest client had $5 million and there weren’t very many of those. Most had between $250,000 and $1 million, he says. His hope was to hang out a shingle and build one client at a time, networking as best he could. In the beginning he remembers accounts as small as $20,000.

Youthful confidence didn’t help, he says. “I was 27, 28, 29 years old in these years,” he says. “So we had a lot of doors shut in our face simply because we thought we had the goods, and the reality was we just weren’t experienced enough. Our client base at that time was largely comprised of people that were within five or 10 years of our age chronologically.”

He needed savings and key loans from family members to help in the leaner years. He cut costs by working in a cheaper part of town (and became a landlord when the previous one walked out on the lease on the suite). 

Don’t Gimme Shelter

As a tax wonk, however, he was in the right place at the right time. In 1986, a year after he started, a lot of people suddenly found themselves in tax shelters that had turned into tax traps thanks to sweeping changes heralded by the Tax Reform Act of 1986. 

Built for the tax regimes of the high bracket Jimmy Carter years, these shelters were mired in illiquid assets like apartments, oil equipment, livestock and even beans, and then sold to the wealthy by advisor marketers who were likely long gone after selling the structures. “You’re talking about an era of 70% tax rates, pre-Reagan era,” Griege says. “Apartments, industrial properties, oil properties, jojoba beans [an agricultural commodity whose golden oil was floated as an industrial product—an answer to the loss of sperm whale oil in the 1970s], equipment and energy packages … cattle.” 

These shelters, largely structured as partnerships, he says, were sold to clients by specialty advisors to generate losses through depreciation and thus weatherproof people from taxes. They were not really meant to be investments to turn a profit, and investors could write off multiples of their losses, turning a $100,000 investment into a $250,000 deduction from other income, says Thoele. 

When 1986 rolled around, a sweeping tax reform act gave tax laws their biggest makeover in a half-century. The tax code was simplified, but the loopholes squeezed shut. Investors could no longer take large losses for businesses they weren’t actively participating in, and the shelters became traps—money losing tar pits. 

Before 1986, says Thoele, “investors could put $100,000 into a tax shelter and they would immediately get to write off a deduction of $200,000, $250,000. And in a 50% tax bracket, they had saved as much money as they had put into the investment. So in 1986, [Congress] disallowed what they started calling passive losses … it created a tax problem for a lot of people. They said these passive losses are only allowed to the extent you have passive income.”

It killed a lot of real estate enthusiasm, and a lot of real estate (not helping the looming land bust, which S&Ls, promiscuous lenders as they were, would amplify to grotesque proportions). These macroeconomic forces were both good and bad for the fledgling RGT, however. 

Eventually clients in a state like Texas where hard-asset investments were favored came to value liquidity and diversification. RGT’S revenue mix began to more closely resemble traditional RIAs. “in the mid 1990s, our portfolio management fees based on AUM became a larger portion of our firm revenues than other fees for financial planning or other projects,” Thoele says. “Today, the financial planning fees are still significant, but AUM related fees are much larger.”

In Play

And while their youth might have given pause to old oil guys, it was no big deal to, say, 22-year-old athletes. To a few young, imminently wealthy football players, it turned out, Griege and Thoele were gray eminences.

Griege met his first sports clients serving on the board of a local youth home along with members of the Dallas Cowboys, and he got to show off financial acumen as treasurer. One member of the team came to him with both tax shelters and rental real estate woes. “His first advisor had got him hooked on the rental income market. So he had four or five different rental houses. He was dealing with tenants and keeping places filled and the tax effects of depreciating real property and not necessarily liquidity.”

The football player asked Griege to hunt down a new sports rep, too, and after interviewing one agency, the RGT cup soon runneth over with sports clients. Eventually, athletes would go on to represent almost one-third of the firm’s business and help make its name in the ’90s. “We had clients that were signed to longer contracts”—sometimes four, five or six years long, he says. “So you’ve got a source of built-in growth.” 

Athletes are like any other client, he says, except their youth and impressionability can harm them. “If they become a client at age 22,” he says, “they’ve got some pretty unique needs. They don’t necessarily have the context to make financial decisions that somebody at 32 or 42 will have. So you have to find a way to accelerate their learning curve to be able to make a financial decision. Most of them have got a very compressed time frame in which they might earn the bulk of their lifetime earnings.”

If someone is a 27- or 28-year-old athlete, he or she might be out of the sport in five years and need to monetize portfolios then. “That’s a lot different from a 35-year-old business executive who might have 20 years until they need to monetize their earnings,” Griege says.

Building Different

While Griege was trying to build the business in the first five years, he would always check in with his buddy Thoele, who at the time was heading up Ernst’s Dallas financial planning division. Griege was so sure his friend Thoele, a CFA, would join him, he planned a portfolio management head position before his friend even got there. For a while, the two engaged in a war of, “Come work for me! No, you come work for me!” 

Thoele finally acquiesced in 1991, taking a bit of risk himself. He walked into RGT with a 4-year-old and a 1-year-old. “I was really sort of putting not only my career but a bit of my family’s future on the line to come join Mark, who had developed some really good clients.” Thoele brought over his own big fish—a client family who had sold a very valuable piece of land north of Dallas in the mid-’80s worth some $10 million to $11 million. That was a huge goose toward the firm’s growth, and with the athletes and another large retainer client of Griege’s, the firm’s ’90s growth story began. Physicians followed. And mid-level executives. 

Growing Pains

The firm first hit $1 billion in assets in 2004. Like a lot of firms, RGT faced growing pains, and in this case, clients grew faster than staff, which was stretched thin, Griege says. 

“Any firm that has the growth we were having, we had to go from stretching our people further and looking at our business; our business needed to have a certain amount of capacity on the talent and service side to support an ever-increasing client base.” 

In 2003, 2004 and 2005, says Thoele, “I remember a time I was thinking we’re all just as busy as we could possibly be working on clients and we don’t seem to have the time. We recognize we need more people; we don’t seem to have the time to interview the people, to hire those people. I remember very clearly the conflict.”

It was in the mid-2000s when the firm started getting offers from acquirers, says Griege, and that’s when he had a moment of clarity. “We were large enough to start getting noticed by consolidators and people who were on the acquisition side of the market,” he says. “Sometimes you need to get offers for your business to help you formulate what your strategy really is. 

“We really want to be an independent firm.” 

That meant another leap. The firm had to develop criteria for finding new people and figuring out how to expand the ownership group so that the generational transfer would be an orderly cascade, not moments strung together of urgency and trauma.

The firm now has 78 employees and 17 owners as of January 2, 2016. Today, Griege and Thoele, though still the majority owners, own less than 50% of the firm; between 2000 and 2007, three more people became partners and since 2008, they’ve had 10 more people come into the circle, one by merger and one by lift-out, the others by organic partner development.

In early 2014, the firm bought the local SCM Advisors, a firm with almost $600 million in assets under management, because of its familiar philosophy and client approach, and brought along its founder John Bricker as a partner. Griege and Thoele say RGT will pursue other mergers in the future, and that it’s open to growing both organically and inorganically.

“We’re very open to continuing to grow on both sides,” but he says it’s easier to do lift-outs than mergers, and the firm can’t accommodate just anybody looking to cash out. The longer term strategy isn’t necessarily to open in many different cities.

“We talk about the potential for other offices,” Griege says, “but honestly we’re in two terrific markets—northern Texas and Southern California [through a team the firm lifted out]. And we serve clients in 30 some different states. So we don’t necessarily need a physical presence in other cities.”

Their accounting backgrounds made the firm different from others and gave the culture a different color, says Griege. “What I would probably say is that the level of professionalism on the professional service side in the Big 8 context, again going back to the early ’80s, that bar was very high.”