Phoenix, The Wild West Of Private Wealth Management; Founder Of A Phoenix RIA Bought By GenSpring In 2007 Resurfaces As A Likely Competitor Hot

 

Feldman was the founder of Inlign Wealth Management of Phoenix, which was purchased in December 2007 by GenSpring. GenSpring is a unit of SunTrust Bank and manages about $20 billion specializing in serving ultra-high net worth individuals.

 

After selling to GenSpring four years ago and then rising to success there, Feldman resigned and took off for the past year. Now he’s returned to run a firm that is likely to becom a competitor to GenSpring in Phoenix.

 

A press release earlier this week said that Feldman joined Miller/Russell & Associates in Phoenix, which manages about $1.3 billion in institutional and private wealth and has about 25 employees.

 

Feldman, in an interview this morning, said Miller/Russell has been focused on investment management and that he will help steer it toward wealth management while expanding its business serving 401(k)s and other institutions.

 

His decision to return to the business, after taking a year off, to run an RIA in Phoenix is particularly poignant because of the massive defection of professionals from GenSpring’s Phoenix office.

 

Having cashed in on building a valuable RIA that he sold for millions, Feldman’s doing it all over again.

 

Feldman, 49, says he became a wealth manager largely because his father was a CFP. “I grew up hearing about the wealth management business at the dinner table,” says Feldman.

 

Feldman remembers as a child laying on the couch at home and watching his father calculate a wealth sufficiency analysis by creating handwritten spreadsheets using a calculator. As a college student, Feldman says, he went to class mornings and worked at his parents’ firm in the afternoons. In 1979 or 1980, Feldman recalls, a picture of his father holding an Apple IIe computer made the cover of Financial Planning and proclaimed the beginning of the era of computerized financial planning.

 

After college at Arizona State University, instead of going to work at his father’s firm, Feldman took a job in Arthur Andersen’s tax division. “I wanted to work for someone other than my dad so I could get a sense of whether I was any good at this,” says Feldman. He apparently was.

 

Feldman rose to run the national resource center providing investment advice to Andersen’s wealth management offices across the nation, as well as run Andersen’s wealth management practice in Phoenix.

 

When Andersen came undone in 2002 following its failed audit of Enron, Feldman offered to buy the right to solicit Andersen’s Phoenix clients and hire that office’s employees.

 

Feldman was the right person at the right time. Armed with Andersen’s client list and a few of its former employees, Feldman founded Inlign Wealth Management in 2002 with 65 clients, 15 employees, and $400 million under management. In 2007, when Feldman sold Inlign to GenSpring, the firm had 175 clients, 50 employees, and $2 billion under management. Capital raised from private investors to buy the rights from Andersen was repaid within 18 months, he says.

 

Feldman worked at GenSpring for three years and says he was promoted to run 13 of its 17 family offices across the country. But in December 2010 — two months after getting married for the second time — Feldman says he tired of the travel and packed it in. He would become one of many advisors to leave GenSpring over the past 18 months. He refused to comment on the defections that have befallen GenSpring’s Phoenix office. 

 

Feldman says he’s had a “one-year honeymoon” and has been active in local arts activities, having been named by the Governor as chairman of the Arizona Commission on the Arts.

 

Feldman is likeable, no attitude about his great rise and no badmouthing any of his former colleagues.

 

If he can repeat at Miller/Russell what he accomplished at Inlign, it will be a spectacular entrepreneurial success story.

 

For GenSpring in Phoenix and nationally, and for other consolidators buying successful RIAs around the country, however, Feldman’s success is their loss.

 

I wonder if Feldman’s story highlights the risk faced by acquirers, the risk that an entrepreneur can sell his firm to an acquirer, work in the acquired firm for a few years, and then quit and become a competitor.

 

Is that a real risk to consolidators? Or is it just an anomaly created because Feldman is such a strong entrepreneur and was so young when his non-compete agreement with GenSpring ran out?