Rick Simonetti and his team at $3 billion-asset Fidelis Capital are creating a wealth management offering that the former Wells Fargo executive insists is harder and harder to find on Wall Street. The firm, based in Tampa, Fla., helped to create a trading system Simonetti says is nimble at tax management and other capabilities. Fidelis recently hatched an alternative-investments fund that he says will feature "unique and niche-y things that typically are too small to be provided by large wealth management firms." In-house accounting services may be in the firm's future, adds Simonetti, who early in his career was a senior tax manager with Deloitte.

Speaking with Barron's Advisor, Simonetti explains how he went from running wealth planning nationally for Wells Fargo Private Wealth Management to becoming a founder and the CEO of an independent registered investment advisor firm. He details the financial incentives that have helped him build a 23-person team, which includes several Wells Fargo and Bank of America veterans. He explains why wealthy clients are frustrated with their accountants, and the "simple" metrics he uses to assess the health of his business.

Why did you decide, after 22 years with Wells Fargo, to move on and build an independent RIA firm? That decision was the culmination of a number of years of strategic change within the bank. When I joined the firm, what was provided to high-net-worth and ultrahigh-net-worth families was a suite of capabilities that you could be proud of. Wells gave me the opportunity to help build out a planning infrastructure that was truly differentiated. In every private bank office there was a tenured, experienced planning professional who could integrate into client meetings. In addition, they had things like special-needs trusts, real estate asset management services, oil, gas, and mineral rights capabilities. They had life and property and casualty insurance embedded in the firm. So you could elaborate with all those professionals on behalf of your clients, coordinating in a way that was hard to do otherwise.

Lots of things then happened at Wells in terms of reputational challenges, etc. That meant regulators and others came in and began to analyze the risks and costs in the business.

Wells Fargo sold off a number of business lines. They sold off life insurance, with the insurance advisors moving to third-party companies. They did the same thing with the property and casualty insurance business. They then materially modified how and when they would provide real estate asset and oil, gas and mineral rights management services, scaling those businesses back. They also disposed of their middle-market M&A business. Those were likely all good business decisions from the company and shareholders' perspectives, but materially changed the client experience for the UHNW client base.

I'd helped to build that planning team and lead it nationally. They started making significantly different strategic decisions, brought in some other leadership, and asked me to pivot to running private wealth management for the Southeast U.S., Texas to Tennessee. My last year there I ran private wealth management for a quarter of the country, and someone else stepped into that planning function. That person took over right as we were voted the best wealth planning in a private bank in the United States. Within a year or two, more than half of the planning team was gone. And it was a strategic decision-it doesn't make it good, bad, right, or wrong-to reduce costs. It was an expensive model, and they decided to cut costs, and that was an area where they cut significantly.

And then additional decisions were made around the leadership structure where it just did not line up with where I wanted to go next with my career. I had this tremendous passion from the day I graduated from college to serve wealthy families, closely held business owners, and advise them in ways that help them overcome the challenges of being in that complex world. And slowly but surely, I was unable to deliver that. I'm a different leader than many in that I've always maintained a significant level of involvement in client relationships. I'd always kept an ear to the ground as to how they were going, and the frustration that we felt watching those resources be removed was also being felt by the families that we observed for decades.

That drove us to say we've got to find a solution. And again, it is a good shareholder-based decision to try to get as many clients as possible served by every team member, and it's a vision decision. But it doesn't line up philosophically with where we wanted to be. I was able to say, "I'm not sure this is right for me." I had a year severance and the opportunity to investigate what could come next. I worked at Fifth Third Private Bank on a 90-day consulting contract to help them refine their planning capabilities and client experience. I interviewed in a lot of places, talked to lots of people, realized the challenges that existed within Wells were not unique to Wells; it was basically where the industry was heading. And so, not being able to find a spot, we decided to build one.

How many client-facing advisors are on the team? We have 12 client-facing advisors, but we're structured a little differently. Almost everyone in our firm faces off against clients. We almost never meet individually with a client; there's almost always more than one member of the team: an associate, a planner, an investment person. We had a call this morning with a family we've worked with for decades, and there were three of us on the phone.

Where do you anticipate being in a couple of years in terms of head count? Our growth has come in the form of adding clients who are introduced or referred to us for the most part, and advisors who seek us out and say, "I need to find a place where I can serve in line with my passion." So we are not actively out there looking to grow our advisor head count. We're not even looking even geographically at growth. We're looking at philosophical alignment as being much more critical. And that's working for us: Just this week we crossed $3 billion of advised assets. Four years ago we started with zero, and half to slightly more than half of our business we didn't know when we launched. They're all people who have been introduced to us as a result of our executing in a way that's made people say, "Hey, this is actually way different than I've experienced elsewhere." These are very wealthy families, so they've experienced multiple providers in the past. One of our longest-tenured clients had been at three or four different firms and stayed with us as we left Wells, and has now introduced us to a number of friends because what we're able to do here is even better than we could do at Wells.

What was a key decision as you put together your tech stack? We started with your basic tech stack that any new RIA might start with: We chose Fidelity as a custodian, Orion as the reporting system, started to do the kind of trading that we need to do for our clients, and realized that the systems did not support it at all. One of our partners, Neale Ellis, had built significant capabilities within Bank of America's private bank. So we decided we were going to manage equities and ultimately fixed income in house. But to do so, we needed a system that was beyond what was generically provided.

So we worked with a firm in New York on a system that has proven really effective, a trading system that allows us to be very nimble with tax-loss harvesting in moments of significant market volatility. For example, April 8 of last year brought a big market event. [Markets reversed gains sharply due to concerns about tariff impacts.] We were able to work through every single client portfolio and harvest losses in a two-day period. Our technology gives us a significant leg up on being nimble and tax-efficient, and avoiding the need to hire third-party money managers in most cases.

Are there any capabilities that you are getting ready to add, or that are on your wish list? Well, one of the things that we just put in place is an alternatives fund. The members of our investment committee all agreed that alternative investments are going to play a critical role in client portfolios, sometimes upward of 20% or 30%. Most people underallocate to alternatives, and when they do, their experience is terrible. So we built our own fund, which we offer as an investment option in portfolios for clients.

We're going to select investments within this fund that give our clients access to unique and niche-y things that typically are too small to be provided by large wealth management firms. We are also able to customize the fee structure to minimize the impact of fees, and to make the reporting structure less cumbersome. In terms of things we're contemplating, I'm not aware of a client who wasn't frustrated with their CPA in the tax-preparing space. So you're seeing a lot of partnerships or acquisitions of tax-prep or CPA firms with RIAs, and that's something we're tossing about as well.

Why are clients frustrated with their CPAs? I think you see the same thing happening in that industry that's happening in others. You see a lot of consolidation. I was at Deloitte for 11 years, and I billed by the hour. It's really hard to spend the time you need to with clients and still get your billing rates to the point that your partners are happy. So I think people's expectations with regard to communication, collaboration, and involvement with their CPA are generally not being met.

What financial incentives can a firm of your size offer to new advisors? We have a structure that allows us to maintain a level of income for the individual or team joining our firm without a significant upfront check, but with the promise of there being something available on the back end based on the value they've contributed to the firm. That's been what we've used to attract talent thus far. Again, most of that talent is already at a point where they're saying, "I've got to find a home; this is not working for me." We can give them a level of certainty, and-now that we've demonstrated the fact that we can grow this firm with our capabilities at the rate that we have-confidence that they're going to build something of tremendous value for themselves and clients and leave a great legacy.

What's your biggest business challenge? I do think about what this next pivot might be for us, whether it's additional service capabilities, additional team members that might augment our capability set. We're thinking about what's next. Our client-to-advisor ratio is under 15, so the amount of time we dedicate to a client across the breadth of the firm is intense. So you might argue that's not necessarily scalable. But when you add one family with $50 million of assets under management, that's scale. Thus far we haven't been challenged to maintain a pipeline of those types of opportunities. So it's just a matter of continuously evolving our service model to ensure we stay ahead of where others are in the space.

What are your go-to metrics for monitoring business strength? Our metrics tend to be really simple. We don't participate in ancillary sources of revenue, so our advisory fees and consulting fees are our two sources of revenue. Our expenses are almost entirely fixed. That keeps it relatively simple for us. So the metric we drive toward is the amount of money we're collecting in terms of revenue. The path that we laid out for our growth, to provide the suite of services we need to and to continue to build out a succession plan, it's really going to be driven off those two sources of revenue.

How do your consulting fees work? One of the things we're capable of delivering is in-depth planning for clients who may not have significant liquidity but who have complicated balance sheets. For example, a family manages 50 pieces of real estate, but they only have $3 million of equity. You can't charge a rate on the $3 million that will compensate you for the time it's going to take for you to advise them on the income-tax, estate-planning, and structuring needs of that balance sheet. What we can do is get a contract in place that says we're going to provide consulting services for a fixed fee. Included in that is whatever asset management they need and unlimited access to our team and our services. It's typically paid quarterly.

Did going from corporate executive to entrepreneur push back your anticipated retirement age? Well, there are several things that can push back a retirement age. One would be having triplets. [Simonetti's three sons are starting college this fall.] Another one would be starting a company. I happen to love what I do and the team we've put together. If I can help create something that ultimately gets passed to some of our team members in terms of ownership, and that ultimately provides multiple generations of advisory services to the families we care about, then retirement can stay in the future.

Thanks, Rick.

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