Steve Rodemer, Cascade Investment Group, Colorado Springs, Colo.
After nearly 25 years at Salomon Smith Barney, Steve Rodemer wanted more control of his business. Retirement might be in his future, he thought, and a wirehouse wasn't a place to build equity.
"When I thought about the deferred comp and CAP plan, I realized it kept people from thinking out of the box for their clients," Rodemer says. "You lose your sense of entrepreneurship."
Rodemer watched two friends at SSB leave management in 1997 to form an RIA and broker/dealer. He began to consider his options.
Rodemer met regularly with a friend in LPL's RIA program to learn the ropes of running an RIA business and worked with an attorney to protect his business during a transition.
Then, Rodemer's two friends, Ken Beach and Craig Ralston, asked him to come aboard. In mid-1999, Rodemer became the third partner in their firm, Cascade Investment Group in Colorado Springs, Colo.
For many years, Rodemer had been a fixture in SSB's Consulting Services Division. Managing equity portfolios for fees accounted for about three-quarters of his 1.4 million dollar business at SSB. Nearly all of his 250 million-plus dollars assets transferred when he left for Cascade.
Rodemer and his partners work separately to provide what they call "wealth management services." The greatest surprise after the move was realizing the wide range of products and services now available to him, Rodemer says. "I tell clients we can have clearing arrangements with anyone, can do mutual funds and annuities with anyone."
Maintaining a broker/dealer was important to only one of the partners, Rodemer says. But Rodemer is seeing some benefits.
"It gives us a lot of flexibility in pricing and allows us to have more autonomy in providing investment solutions that add value to the client," he says.
So far, Rodemer's clients are experiencing changes in the retirement plan area. He established a relationship with a pension plan record keeper who he believes will service plans better. He also uses Fidelity's 401(k) plans. Rodemer can structure a portfolio with multiple no-load funds he didn't have access to before, with better pricing.
Pricing is one of the key benefits to being an independent RIA, Rodemer says. He forged relationships with First Union's CapTrust program and Lockwood Financial. The affiliations give Cascade a wide range of unbundled services at competitive rates.
At the same time, there's a downside to becoming an independent RIA, Rodemer says. Too many choices. "All you know is what you've been spoon-fed by the wirehouse," he says. "It's a lot of work now to evaluate what products and services will give my clients the best value."