John Peterson wanted his small financial advisory firm, CWM Financial Group in Gaithersburg, Md., to grow but he had reached his limit for handling new clients. He turned to a larger firm for help.

Some large advisory firms are offering their experience and investing techniques to smaller firms to help them grow beyond their current limits. Pinnacle Advisor Solutions in Columbia, Md., is one such firm.

Peterson decided to let Pinnacle handle some of his administrative chores and investment planning. After working with Pinnacle for about a year-and-a-half, Peterson says he has cut his administrative work and freed up about 50% of his time. He has also grown his business from $35 million in assets under management to $41 million without marketing, and switched to Pinnacle’s private-label risk-managed tactical strategies for active investing rather than the buy-and-hold method he had been using.

“We created Pinnacle Advisor Solutions because we saw a need in the marketplace,” says John Hill, CEO of both Pinnacle Advisory Group and Pinnacle Advisor Solutions, a division of the Advisory Group. “Our expertise is that we built a firm from zero to $1.2 billion in assets under management and we wanted to use that experience to help others avoid mistakes.”

Pinnacle Advisory Group created Pinnacle Advisor Solutions in 2011 to provide business solutions for advisors who want to free up more of their time to work with clients.

“At the point where small firms cannot grow anymore, advisors used to have two choices: join a larger firm or pool resources with other small firms and split the labor,” Hall says. We wanted to give them a third option: to team up with a large firm but remain independent.”

Pinnacle Advisor Solutions says its services can help a variety of advisors. That includes small firms that want to grow their practice and older advisors who need succession planning. It also includes wirehouse advisors who want to break away from their broker but need a turnkey operation from a third-party source to make the break toward independence. And Pinnacle offers tactical and strategic investment management solutions for advisors who feel a buy-and-hold investment strategy isn’t working anymore.

Pinnacle Advisor Solutions aims to free up 40 percent to 80 percent of an advisor’s time by taking on many of the duties. It doesn’t want to be a huge operation with hundreds of firms under its umbrella, Hill says. So far it has four advisor firms, including CWM Financial Group. The firms it wants to take on will be in the $25 million to $400 million AUM range, says Peter McGratty, vice president of business development at Pinnacle Advisor Solutions.

Pinnacle has partnered with FocusPoint Solutions of Portland, Ore., to provide back-office support. Smaller firms signing on with Pinnacle can use FocusPoint services or hire either company separately. FocusPoint provides the software for such things as account management and record keeping and has a dedicated support staff for advisors.

Pinnacle and FocusPoint refer clients to each other but have no economic ties. Pinnacle charges 45 basis points, which is paid by an advisor’s client. Focus Point charges 20 basis points, which is paid by the advisor instead of purchasing technology and adding staff.

“The financial services industry is becoming more competitive and it is more difficult for smaller firms to do everything they need to do,” McGratty says. “We provide the resources the small firms need.”
––Karen DeMasters