Lester P. Botkin, who goes by “Les,” had been at Morgan Stanley for eight years before he left in March to found Botkin Family Wealth Management in McMurray, Pa. Joining him were Sara Botkin, his daughter, and Lester H. Botkin, his son, who are both advisors. The firm, which manages about $210 million, uses LPL Financial as its broker-dealer.
Q: What was the main reason you left Morgan Stanley?
A: We wanted to start a family business. We worked together at Morgan Stanley, but everyone operated fairly separately. In essence, we wanted to create a partnership on our own terms. Now, we decide how to divvy up the pie in terms of pay and what duties each team member needs to assume on a daily basis. Going independent has also let us take control over how we want to build a long-term succession plan to best suit the interests of our clients and family.
Q: Why did you choose independence?
A: Besides being able to divvy up our production more to our family’s liking, by owning our own business, we were able to pick out our own offices. I think a key to growing a business in this industry comes down to working in a highly visible location. At Morgan Stanley, we were tucked away on the second floor of a large office building. We’d been eyeing for years a nearby 4,000-square-foot building on a major thoroughfare in the south hills of Pittsburgh, with traffic of around 10,000 cars each day. When it became available and we were able to negotiate terms to purchase it ourselves, the opportunity to form our own business just became too attractive. We knew it was time to make a move.
Q: What was the hardest thing about the transition?
A: We followed the industry protocol to the letter. But we actually bought the building five months before the actual move. So we had to get all-new furnishings, set up new computers and have new walls built. And we had to do this all in secret — the new location was only about one-and-a-half miles away from Morgan Stanley’s offices. So it was extremely nerve wracking going to work every day knowing that one of our colleagues could easily find out what we were doing. Our assumption was that if they found out, we could’ve been terminated before everything was ready to go.
Q: How many of your clients came with you?
A: After three months, about 85% of our clients have moved with us. We hope to have more than 90% by the six-month mark. So we feel very fortunate.
Q: Did their fees change?
A: Yes, we’ve been able to lower them slightly. The biggest change is that their fees for IRAs and brokerage accounts with less than $1 million have gone away. Morgan Stanley never pushed us to sell any particular fund or investment, so we haven’t found a whole lot of savings in product costs. Of course, as an independent, we don’t have to get involved in banking products. On the whole, we’ve found that to be a positive for our clients.
Q: How about your compensation?
A: We certainly hope to grow the business, so it’ll be better over time. But in the beginning, our compensation isn’t a whole lot different. We also have major business expenses to take into consideration in getting our practice off the ground. So far, we haven’t had a problem with profitability. We’re not expecting it to be too much longer before we’ll be making more than we were at Morgan Stanley.
Q: Any advice for other FAs who are thinking about breaking away from a wirehouse?
A: Talk to other people who’ve gone independent. And make sure to increase your visibility and keep in touch with clients to make sure they view your move in a favorable light. Long before we even considered breaking away, we made it a practice to contact clients on a monthly basis. An important part of deciding whether to leave a firm is being honest with yourself about how close are the ties you’ve built with people over the years. If you don’t have a lot of strong relationships built, then you’d better take care of those types of customer-service issues right away.