Our CEO and Co-Founder, Nate Lenz, recently joined The Buyer’s Boardroom podcast to discuss the popular 1099 model, also known as the OSJ model, for structuring wealth management firms. Before becoming an independent hybrid RIA, Concurrent was an OSJ on the Raymond James platform. As host Allen Darby noted, many firm owners and financial advisors are drawn to the benefits of the model, including each advisor retaining ownership of their own book of business. He also cautioned this may cause problems when it comes to firm valuation.
When Concurrent broke away from Raymond James and established our hybrid RIA, we took specific steps to ensure our structure encouraged joint investment and upside alignment. As a company, we could maximize our valuation, and our advisors had compelling financial incentives, too. By working with Merchant, we created and deployed a model of joint investment where our partner firms get equity in Concurrent, we acquire a non-controlling stake in our partner firms, and they also have access to future equity investment opportunities at a preferred tagalong rate. This innovative structure helped us go from “being a vendor to being a partner,” Nate said. We’ve found this upside alignment deepens our value and our partnership.
“Under our structure, what we’re looking to facilitate for (partner firms) is the ability to tap into those higher multiples without having to give up control to do so. And I think that’s what’s really unique about the model,” said Nate. Listen to the entire conversation!
