Brothers Harold Williams and George Williams, along with Harold’s son Grant Williams, announced the launch of their new registered independent advisory firm on the Dynasty Financial Partners platform on Wednesday.
Named Precedent Wealth Partners, the San Antonio, Texas-based firm hopes to set a new precedent with a profit-sharing fee rebate program for clients called ‘”WillShare.”
The five-person team previously managed more than $1 billion in assets at Linscomb & Williams, a $4.3 billion AUM Houston-based wealth management firm where Harold was CEO and George was serving as executive vice president. Both were with the firm from the beginning, while Grant Williams joined as a business development manager almost five years ago.
In the wake of their departure, Phillip Hamman has stepped into the dual role of President and CEO and G. Walter Christopherson is the firm’s new vice chairman, according to the firm’s website.
“That name goes back many, many years. We’re very proud of what we built there,” said Harold Williams, noting that the firm’s other namesake, founder Dan Linscomb, has long since retired. “It’s very successful and obviously will continue to be, but I’ve had some things in my mind for a number of years that I’d want to try if I had it to do over again—and you can’t really go backwards at a mature firm like that.”
One of those things, he said, was to develop a model akin to Vanguard’s investor-owned funds, created in the 1970s. He quickly realized he wouldn’t be able to replicate the model and make his clients owners of the firm, so the WillShare program was created to allow clients to participate in the success of the new business by sharing a third of net income with them annually.
An added benefit, he noted, is the program is likely to make the firm less appealing to acquirers and private equity investors.
“We can make [the clients] feel like owners and actually share in some of the economic benefits—and so we’ve set out to do that,” Williams said. “I think the bigger benefit really is that it really kind of ensures that we’re creating a firm that frankly will not be attractive to be sold to a third-party owner. The current narrative so often with firms that are forming is they’re building something up and then they want to sell it to a third party.
“And that’s very good for the advisors that own it,” he said. “I’m just not confident it’s great for the clients.”
Under the program, the firm’s owners will reserve half of the declared after-tax profits each year, to be returned to clients the following year in the form of fee credits and reduced costs.
“That’s a level of fiduciary-friendly that I’ve just never heard of,” said Jon Henschen, founder of recruiting firm Henschen and Associates. “I’ve seen it on a broker/dealer level like where United Planners is structured as a limited partnership and 55% of the profits are given out to their advisors each year of the broker/dealers’ profits. But this is interesting to see, where the client benefits from the profits of the RIA. It’s an interesting niche, that’s for sure.”
He agreed the program would act as a “poison pill” for potential acquirers, but said it would likely make the firm more attractive to advisors who don’t want to be sold.
Williams said equity ownership will be extended to all client-facing advisors at Precedent to ensure those clients are interacting with the firm’s owners.
“I think clients really like to do business with owners, and that’s true in wealth management,” he said. “I hope it becomes like the hundred-year-old law firm where the old guys like me who eventually have to walk out the door are selling their equity to the newer people coming in.”
Precedent chose to launch on the Dynasty Financial Partners platform to avoid many of the headaches they encountered while building Liscomb & Williams more than four decades ago.
“We had to build all of the supporting infrastructure, including everything that’s not essential to the client service delivery,” said Williams. “Dynasty can take a lot of that load off, which would be an enormous distraction if we were trying to replicate what they can offer. They’re an extremely valuable partner and they’ve got some economic scale, which will mean we can deliver a better bottom line for ourselves and for the clients that are sharing in that.”
“We welcome Harold, George and the whole Precedent Wealth Partners team to the Dynasty Network and we look forward to working with them in building out their firm,” Dynasty CEO Shirl Penney said in a statement.
Precedent provides investment management, wealth planning, estate planning, tax strategy, insurance/risk management and retirement planning. Schwab and Fidelity have been selected as custodians, while Black Diamond will be used for performance reporting and eMoney for financial planning.
The new firm plans to open a Houston office in August and has a “soft goal” of hiring 10 employees and reaching between $500 million and $1 billion in client assets by late 2024. Williams said the firm would likely bring over some Linscomb clients but is restricted from actively pursuing those relationships at this time.
“The name Precedent is aspirational in the sense that we hope maybe we’re setting a precedent that some other people in the industry will look at and take note of and think, ‘This is a good model, it’s very client centric,'” he said. “Maybe some other firms ought to be thinking about doing it.”
“The beauty of the RIA model is that you can do whatever you want,” said Tim Welsh, president of wealth management consulting firm Nexus Strategy. “You can create any sort of flexible structure. You can pick your clients, you can pick your fees, you can pick your investments, you can pick your custodian, you can pick the wallpaper. In this case, they have the ability to really drive the client experience they want.”