Karl Frank, one of four principals at A&I Financial Services LCC in the Denver suburb of Englewood Colo., had to sort out a complicated family situation a decade ago after his father died.
His father, Tom Frank, had founded a successful law firm but hadn't planned for what would happen if he died or wanted to sell. When he died, Karl's mother ran into business and financial difficulties.
"It was eventually resolved, but I can't do enough now to help others avoid the kinds of problems my mother faced," says Frank. "Because my father died without a business succession plan, my mother was thrown into an overwhelming situation and the other attorneys in the firm suffered. Now, at A&I, we help business owners avoid this situation by making sure they talk to their spouses, delegate decisions and, in short, have a plan."
A&I has been in existence for more than two decades, but only began to offer fee-only services in 2004, which it now combines with its commissions. The firm now has $100 million in assets under management, $30 million with a percentage-based fee, and is growing at about $20 million a year, outperforming the goal of adding $1 million in AUM a month. Although the firm deals with a variety of clients, it has carved out a niche in the world of small business owners and business executives and even further refined that niche to service those looking to exit the business world.
"Nearly 80% of the business owners in the Denver area own small businesses, but investment banks do not want to handle these businesses that have $10 million or less in revenues a year," says Frank. "Many of these business owners are in their 50s or 60s and either are beginning to think about retiring or are ready to exit."
A&I has clients that range from a Marine with $2,000 invested, who Frank describes as a "client of the heart," to several clients with more than $20 million in overall assets. But most clients are small business owners with assets in excess of $2 million.
Working with the Business Enterprise Institute, a business exit planning firm based in the Denver area, A&I helps both those seeking a way out and those owners who are still in the game but need to create emergency plans in case something goes wrong. The firm handles the personal investments of the owners and some of the investments for the businesses and the employees. The firm hopes to expand in the future by taking the exit planning strategy to a national level and providing complete employee benefits packages for small businesses.
In the meantime, A&I is helping clients through the current economic turmoil. In part the firm has been investing in alternatives, but it has also benefited from the help of a proprietary system that got clients out of the market before it took a nose dive, putting many of them into cash investments. Now they are waiting for the opportune time to re-enter.
A&I has empathy for its clients because the firm itself is a small, family owned and operated entity. Art Rewinkel, Frank's father-in-law, co-founded the firm 23 years ago as a commission-based investment shop dealing in insurance and annuities.
"That was the way many firms operated then," says Rewinkel, who founded the shop with his wife, Inge, "but we were considering moving to an asset management style of business at about the same time Karl was graduating from the University of Denver. He became the catalyst for the firm making a major U-turn to move away from selling products to managing our clients' assets." Karl, who is a CFP, now works with five advisors and five support staffers, who manage assets for approximately 400 clients. Some clients choose commission-based and flat-fee accounts. Their fees vary based on the amount of assets invested, but are typically around 1%.