What is in this article?:
In this interview, Michelle discusses her decision to leave the wirehouse world 6 years ago (she was a “breakaway broker” long before the term was even coined), her partnership with her mother, and her vision for Source Financial Advisors, the specialty boutique wealth management firm she launched several months ago.
MINDY DIAMOND: I know that you have some strong feelings about why you’ve chosen to build a specialty niche firm versus being a generalist. Can you share a little bit about that philosophy?
MICHELLE SMITH: I think the age of the generalist is over. The real question is: “What’s your value proposition?” Investments are investments; everybody can do asset allocation; technology has become amazing and the platforms are all looking very similar. So what sets you apart? After almost 30 years of experience in this business, I see a major shift of wealth to a younger generation and there’s a female demographic rising. You have to specialize in order to help these groups of people and a lot of times things center around financial transitions, the money in motion. This specialist approach is not marketing or advertising. Specialties require focus and deep knowledge and expertise in the client’s monetization event itself. I think you have to immerse yourself in something you really like to do and be honest with yourself with what you're good at and become a specialist in that area and then concentrate on how you are going to network with centers of influence in that specialty.
MINDY DIAMOND: And who are your primary centers of influence?
MICHELLE SMITH: Matrimonial attorneys, accountants and all the professionals involved with concentrated stock positions, whether that’s securities attorneys, estate planning counsel, etc. To me, that’s your leverage and that’s your scale and that’s your power. Saying I’m a specialist in divorce is powerful—it’s a show stopper. What I specialize in resonates with people.
MINDY DIAMOND: So you’ve chosen to partner with Dynasty Financial Partners (Dynasty is the leading provider of investment and technology platform for independent advisors with sophisticated client needs). What went into that decision? What does Dynasty do for you? How does it factor into your overall equation?
MICHELLE SMITH: I call Dynasty the “RIA SWAT Team.” I had a breakfast with Todd Thomson (one of the founders and principals of Dynasty) last year and halfway through breakfast listening to what he built, I thought, “Oh my God, six years ago when Alex and I started our business on our own, I was like a general contractor doing it all.” And I’m listening to him and all I could think about was “wow”, this is going to be an industry changer. They have figured out the independent advisor space and how to support you where you are and where you want to grow with what you need.
MINDY DIAMOND: So give us an example of the most powerful thing they’ve done for you.
MICHELLE SMITH: I had to execute a large post-IPO variable prepaid forward and collar transaction for a concentrated stock position. I won this business because I was able to shop it to investment banks right to the institutional level and have them all compete and come in with pricing. Because of Dynasty’s power and connectivity, I was able to get four investment banks that lined up and I was able pick the one with the best pricing and opportunity for this deal for my client.
MINDY DIAMOND: That’s a great example. Do you have another?
MICHELLE SMITH: Another example relates to lending. I was at a hedge fund conference in May over Mother’s Day weekend this year. An attorney I had previously done work with walked up to me and said, “Do you offer high end lending?” I said, “Yes.” He said, “I need a $15 million loan in four days.” I called Todd (Thomson), who was at the conference as well, and as if by magic, we had banks bidding on and getting this client a desperately needed bridge loan--in four business days.
MINDY DIAMOND: Why couldn’t the client’s lending needs have been satisfied as expeditiously within the wirehouse world?
MICHELLE SMITH: Can we show facial expressions in this article? Oh my God, can you imagine? You can't bid business if you work for a company. End of story. It’s not objective. You're not a consultant. It’s either the wirehouse or nothing.
I couldn’t have done this without Dynasty. How am I going to get on the phone with four senior bankers that I had no relationship with? I couldn’t have done it. This really opened my eyes. Dynasty brought an opportunity to the table that I was not only never going to get on my own, but made it possible to win business I would never even have gone after – a $200 million transaction.