Ep 373: Transitioning To Launch A New RIA By Taking On Passive Investors For Startup Capital With Ben Hockema
Financial Advisor Success
Michael Kitces
4.7 • 719 Ratings
🗓️ 20 February 2024
⏱️ 88 minutes
🧾️ Download transcript
Summary
Ben Hockema is the Founder of Illuminate Wealth Management, an RIA based out of Illinois that oversees $100 million in assets under management for 55 households. Ben's unique journey in the advisory world saw him rise from intern to partner over 13 years at a growing firm, only to discover a cultural mismatch. He navigated this challenge by engaging passive equity investors for his new startup RIA, enabling him to acquire a portion of his client base and establish the business he truly envisioned.
Listen in as Ben shares his strategic journey in the financial advisory world and details his rapid growth from $16M to $100M in assets under management in three years. You'll also hear about his evolution from intern to partner, his realization of a misalignment with his firm's vision, and how he navigated the emotional challenges of leaving long-standing business relationships, finding invaluable support in a peer advisor study group and learning the power of asking 'dumb' questions for career growth.
For show notes and more visit: https://www.kitces.com/373
Transcript
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| 0:00.0 | Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with financial planner, speaker, and consultant Michael Kitsas, to hear stories of how leading financial advisors navigated the inevitable challenges that arise on the path to success and get insight from leading industry consultants about how to break through to the next level in your |
| 0:21.6 | advisory business. And now here's your host, Michael Kitsis. Welcome, everyone. Welcome to the 373rd |
| 0:28.9 | episode of the Financial Advisor's Success Podcast. My guest on today's podcast is Ben Hockma. |
| 0:34.7 | Ben is the founder of Illuminate Wealth Management, an RAA based in Barrington, |
| 0:38.3 | Illinois that oversees $100 million in assets and management for 55 client households. |
| 0:43.0 | What's unique about Ben, though, is that he spent 13 years successfully working his way |
| 0:46.9 | up the career track at a growing advisory firm, starting as an intern and eventually making |
| 0:50.8 | partner only to realize within 18 months that it wasn't a good culture |
| 0:54.7 | fit for him and that he'd need to leave, but then figured out how to take on passive equity |
| 0:59.2 | investors in a new startup RAA who helped finance his ability to buy out a portion of his client |
| 1:03.7 | base from the firm he was leaving in order to build the business he really wanted to build. |
| 1:08.2 | In this episode, we talk in depth about how Ben leveraged some of his |
| 1:11.5 | personal relationships to find two passive investors who were willing to give him money in exchange |
| 1:15.7 | for a 25% stake in his new RAA and the 16 existing clients he'd be buying out from his prior |
| 1:21.1 | firm. How through developing a structured annual client service calendar guiding their offerings |
| 1:25.4 | month to month throughout a given year and a fee schedule structure on a client's net worth, Ben has been able to attract prospects and rapidly |
| 1:31.4 | grow his client base from 16 million to 100 million in just the past three years. |
| 1:36.7 | And how Ben's successful growth phase led him to do a second round of capital with a wider |
| 1:40.9 | base of 13 investors, where he sold another 10% of his equity in order |
| 1:44.6 | to further pay down his debts incurred in the original RIA transition and launch. |
| 1:49.4 | We just talk about Ben's journey from a three summer long internship at his first firm |
| 1:53.9 | to being offered an opportunity to take over an acquired firm in its client base in Chicago |
... |
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