By Steve Garmhausen

When Paul Carlson and Thomas Fautrel left the world of Wall Street brokerage firms to form Seventy2 Capital Wealth Management, they intended to form a two-advisor business. "Then we ended up onboarding an old friend who was an advisor at Morgan Stanley," says Fautrel, the president of the independent business. Eight years later, the Bethesda, Md.--based wealth management firm supports 74 advisors and oversees about $10.6 billion of assets.

Speaking with Barron's, Fautrel and Carlson, the firm's CEO, discuss a key differentiator for their company: Its affiliated advisors own their businesses, but have access to Wells Fargo's investment platform and other resources. They discuss the challenge of preserving a small-firm culture even as the business balloons. And they reveal how they adjusted their investment mix before the start of what has been a rocky 2025.

Barron's: What is your origin story?

Thomas Fautrel: Paul and I met when we were advisors at Merrill Lynch back in 2007. Post-financial crisis, we ended up leaving Merrill Lynch to create a team at Morgan Stanley. Paul and I didn't share any clients, but we shared resources. We had an assistant, a junior financial advisor, and a person who did some financial planning. By 2016, we thought independence was becoming a more viable option for us.

We chose Wells Fargo Advisors Financial Network, or FiNet, which is Wells Fargo's independent advisor channel. We chose them because we had been at wirehouses [large national brokerage firms] for our whole careers, and our clients were used to having the full suite of services that wirehouses had. Wells is unique in that they are a wirehouse, but they also have this independent channel where you plug in and get all their resources for clients.

As a member of FiNet, we have access to all bank services. This includes commercial and private lending, even specialty lending for airplane and art purchases. We also have access to Wells Fargo trust services and the ability to choose outside trust services. In addition, we benefit from Wells Fargo's healthy balance sheet as it relates to the safety and security of client cash, and from their robust cyber protections. So, we left a little over eight years ago with about $220 million of client assets and five or six people to start Seventy2 Capital.

How did you decide on that name?

Paul Carlson: We started the firm while our office was located at 7272 Wisconsin Ave., and we liked the play on the rule of 72 [a method for calculating how long it will take an investment to double], since a core part of our offering is to grow and preserve client wealth. The use of the word and number was meant to focus on something new and fresh, which aligns with our approach to the business.

Today, the business has evolved into a platform for advisor teams. How did that occur?

Fautrel: Originally we just wanted to serve our own clients. Then we ended up onboarding an old friend who was an advisor at Morgan Stanley. He would get the benefits of independence without the responsibility of running the business, whether that's regulatory compliance or real estate or dealing with lawyers. And he seemed very happy with the offering and with his decision to come over.

In 2018, I went to Paul and figured there might be other advisors looking for independence who would be good fits. Fast-forward to today, we have 74 advisors. I think it's a testament to the platform and our "can do, will do" attitude for our advisors and staff and clients. We've also done a great job of building out our corporate team. We have a marketing team, compliance team, an onboarding team, a human resources department, and an investment management program that we run. So, we've built an offering where the advisor gets access to Wells Fargo and also access to a white-glove team to support their business.

Can you describe what draws advisors to join your firm?

Carlson: One of our differentiators is our great marketing team. Every advisor -- and, for that matter, business -- is working to break through anonymity. When an advisor joins Seventy2 Capital, we publish a press release through a service that gets it out on hundreds of publications across the country. We echo this news on our LinkedIn profiles and those of the leadership team at Seventy2 Capital. We produce a custom bio and pitchbook that highlights the advisor's unique skills and service offering in the marketplace. These materials go far beyond the generic verbiage that is typically produced on a website at a wirehouse. Advisors can customize their marketing approach by buying ads -- even billboards -- hosting client educational events, passing out personalized fliers and postcards, or hosting grand openings in their marketplace. We have advisors doing each of those right now.

There are a number of platform businesses that support advisors who want independence, like LPL Financial or Dynasty Partners. What makes you different?

Fautrel: I think we're very unique. We have a large company behind us that gives us access to a large platform for advisors to serve clients. But at the same time, all of our advisors are independent. It's a very high-end organization that advisors can plug into without having to set up any of the infrastructure or take any of the risk that you would need to start your own company. I haven't come across anybody like us.

Do you anticipate that enough advisors will keep seeking independence to sustain your growth?

Fautrel: Yes, I think that trend is only accelerating. As long as we have capacity to continue to take on advisors, making sure we have great corporate folks in place to support the growth, we will. I think we're in the early days of the independence movement.

What would you say is your biggest business challenge right now?

Fautrel: Probably keeping up with the growth and the demand. I think that's a challenge.

Carlson: Just to elaborate, it's making sure we maintain the culture as we grow. So far, we have found that scaling makes us better. Initially, Tom and I would wear many hats, and over time we were able to bring in people with more expertise, and that only makes the quality of our offering better and allows us to solve client problems internally.

Other elements of the business also continue to get better with scale. Marketing is an example -- with more scale, we've been able to add firepower on the staffing side. We do quite a lot of educational webinars to touch on different topics that are coming up in our client conversations, and we have the expertise to do it. You always have to stay at the head of the growth curve, because you don't want growth to overtake quality. You can get right up to the tip of your skis, but I don't think we've gotten over our skis.

What are your clients concerned about these days?

Fautrel: We started this year with some volatility after a pretty good 2024, so obviously the headlines are about tariffs and market volatility have them on alert. I think clients are concerned about a slowing economy and how the market responds to that.

Carlson: Also, we operate in Washington, D.C., and the policy environment here is tough. There's the streamlining, or whatever you want to call it, of the federal government. So, a lot of client conversations are not only about the market, but also about the job market, about clients' income and balance sheets. We tell clients to focus on long-term goals, which are usually retirement or getting kids through school.

For clients in your target demographic, market turbulence can be scary. Can you talk about some of the portfolio adjustments you've made recently?

Carlson: Actually, I know of no client, whether they have $1 million or $10 million, who doesn't feel upset when turbulence hits the market.

Fautrel: We took a hard look at our holdings going into the end of last year. Obviously, we'd had about 10 companies that had led the market higher over the past couple of years. So, we wanted to make sure we were allocated in a way that if those didn't continue to perform, the portfolio would be in good shape. Wells Fargo has a really good alternative-investments platform you can plug into, and adding alternatives, whether that's private equity or private debt or hedge funds, has been very helpful for clients this year.

Where did you reallocate assets after taking some of those gains?

Fautrel: At the same time that we saw a few companies dominate returns over the past two years, we saw many high-quality mid-cap names improve in their fundamentals, coming out of the recessionary-like environment of 2022. We diversified to many of those names within financial and industrial sectors within our equity exposure. Also, given the expectations around policy volatility coming with the new administration, we increased our exposure to market hedges for downside protection.

What's the key to differentiating yourself on the investment front?

Fautrel: When a client comes in the door, what they're really looking for is a custom solution. Customization is the value add. Not every client gets every investment. An executive at a publicly traded company might have exposure to one sector, and you're looking to hedge that exposure with other strategies. That could be an alternative investment; it could be an options strategy. I'd say the value add for Seventy2 Capital is that we have the capability to manage every portfolio on a custom basis.

Thanks, Paul and Tom.

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May 09, 2025 16:00 ET (20:00 GMT)

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