Over my nearly four decades as an advisor, I've seen quite an evolution in my practice. There was a day when I would take on new clients with $2,000 IRAs, and I would buy securities for them as their whims dictated. I figured out what they thought worked, and I aligned my recommendations to their biases. My goal was to amass assets and aligning with client predispositions seemed the path of least resistance. But I began to realize that my practice would have no common themes if I allowed it to develop this way. This lack of repeatability would significantly hinder my ability to build scale. I also realized that reallocations or swaps that involved calling the clients first were a black hole of time consumption, so discretion was the linchpin to scale. Discretion is also the single most important part of becoming irreplaceable to clients, leading to a 95% conversion rate when I ultimately decided to jump to RIA registration to fix these issues. A wirehouse brokerage platform can tolerate this discretionary business model at scale; it's just not as easy nor distinguishable for clients who find themselves looking for something different.

Over the years, I gradually figured out how things worked through my own observations, which seemed in conflict with much of what I had been told. There is freedom in arriving at that spot; don't underestimate the relief you'll find there. I began to develop processes to deliver an asset management experience that fit with my beliefs. Once I figured out how to articulate those beliefs to others, my practice really took off. My breakaway practice grew from $250 million to over $1 billion in a decade, as I operated solo the entire time, growing to just a staff of eight.

I pass on new clients whose philosophies do not align with mine, including a $40 million prospect who harangued about his past advisors’ failures when they clearly had followed his direction. No thanks. It's not my job to convince them otherwise, and since I have no shortage of incoming new accounts (averaging $50M per year for a decade), I have little incentive to proselytize them.

We offer clients three primary equity strategies that have a spectrum of attributes. We custom-build our clients' portfolios within our area of expertise, mixing and matching those three silos. We allow clients full input on risk tolerance and goals, but we do not allow clients to choose how we get there. This allows us to be the experts; controlling investment exposure and taxes has yielded compelling results and tends to create a vacuum that sucks all the client’s other money in, often prompting a declining fee vortex.

Many advisors get stuck in the path of least resistance methods and never evolve to scale. I get it. It’s comfortable to sit in a little cocoon and grind out a living without realizing the fulfillment we can find at the edge of our comfort zone and beyond it. I once bumped into my former UBS assistant branch manager one day while shopping at Home Depot. In a condescending and pitying little voice, she asked me if I was running “my little advisory practice out of my garage.” I said, “No, that’s where I park my Bentley.” It's a big world out there, and I hope you find your fulfilling spot in it.

Gil Baumgarten, president of Segment Wealth Management, is a 36-year veteran of the investment industry. In 2010, Baumgarten made a break from the brokerage world to start Segment, a fiduciary firm where the interests of the client and the firm could align. He is a multi-year recipient of the Top 1,200 Financial Advisors in America distinction by Barron’s and is a newly published author. FOOLISH: How Investors Get Worked Up and Worked Over by the System launched in May 2021.