Independence isnt always the same thing as freedom.
In 2016, that truth dawned on Greg Grooms as he explored options for transitioning his then- $300 million practice to a new business model.
He needed a bigger platform to potentially scale and a bigger marquee than the affiliation with a local CPA firm with whom he’d started the practice.
But being on his own felt too much like going it alone.
Maybe the new franchise model launched by Charles Schwab’s Independent Branch Services could provide the best of both worlds: breathing room to craft the practice he envisioned combined with robust back-room support for bringing clients the very best tools to help fulfill their financial goals.
The franchise model is a standard in some industries – quick-serve restaurants, home services, and retail – but less often deployed for professional services. In 2011, Schwab pioneered the model for financial services. Greg Grooms, based in Gainesville, FL, and Scott Parker, based in the Dallas area, and a few others gave the model a shot. Now, the franchise model is proven – by those original few and nearly 100 others. Grooms’ firm now manages over $2 billion in client assets. Scott Parker started from scratch with when he opened his Schwab franchise and now, he and his team manage $2 billion. Here’s what they have to say about how they did it – and what other financial advisors need to know about this unique model.
Q: Over a decade ago, you sized up the Schwab franchise opportunity and calculated the perceived risk of transitioning your practice to a then-new model. What prompted you to pull the trigger?
A: Scott Parker: I had a great job and I’d be quitting to do this thing that had no precedent. I realized that this platform solved for everything that I saw independent RIAs struggle with. On paper, it looked like it should work. I’d done the numbers. My wife and I hunkered down and got ready to not make money for a while. But then, the first month, we had cash flow. To the bank. We didn’t lose money and I looked at my wife in shock and disbelief. And I realized that this really was going to work. It was real.
Greg Grooms: This was going to be the last move I made of my whole career. I had to do it right. I took over three trips to meet with Schwab staff, over six months. And, big-picture, I thought a lot about where the world is going. There are so many more people who want some of the things that Schwab offers. The Schwab brand pulls people in, rather than constantly prospecting. It opened up an entire universe of clients that we would never have seen before.
Q: Like many entrepreneurs, independent financial advisors often get to a certain point and realize that they’re spending more time managing the practice than working with clients – which is why they got into financial services to begin with. How does the Schwab franchise model resolve that dilemma?
A: Parker: I ask advisors to tell me about the limitations they have. Is it a minimum portfolio that sets a threshold for what clients they’ll work with? Or the product list? Is that list also limited by how you get paid for those products? If the answer is yes – you have limits – then you have limits on your practice model. With Schwab, you can work with any client – right down to opening a child’s investment account. And you have a huge list of approved products. Clearly, you’re more independent when you have a great tool set.
Grooms: I’m running a business now, not a practice. My best talent is explaining to clients how their financial plan can change their life or give them a successful retirement. We’re not hands-on money managers. Schwab is doing it. This model allows me to function more as a mentor with my staff, too.
Q: What ‘under the lid’ factors do financial advisors need to know to evaluate how the Schwab franchise model might help them achieve their professional and personal goals?
Grooms: You need to leverage the tools. If you are an advisor who believes that your value-add to your clients is to run their portfolios, buy and sell stocks and funds, and do it with the people in your office, you’ll be missing out on 90% of what Schwab can offer. At Schwab, the revenue model is so broad, you can constantly do the right thing for your clients. You focus on how you can help people.
Parker: You have to embrace the model. You’re working with people who are the top of their game, and you’re also running your own business. You do have to play to each of those strengths. But, bottom line, I can work on my business because I know Schwab is working on my business, from their side.
On your own, but not alone. Charles Schwab Independent Branch Services blends of entrepreneurship with enterprise support. If the stories you’ve heard from Scott and Greg resonate with you, you may be the right fit for Schwab franchise ownership. We welcome you to open a conversation with the Franchise Development Team at franchise.schwab.com/get-started.
Disclosures.
Comments have been edited for clarity and length.
Franchise owners are not employees or agents of Charles Schwab & Co. and are not compensated for their comments.
Statements made by franchise owners are their own and may not be representative of the experience of others. They are not indicative of future performance or success and come strictly from the franchise owner's direct experiences.
This advertising, and the franchise sales information within it, is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. If you are a resident of one of these states, or if you wish to operate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with any applicable pre-sale registration and disclosure requirements in that state.
MN registration number: F-6699
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