HearthStone's Road to Independence
By Paul Hynes, CFP®
In 1776 the fledgling U.S. Congress adopted the Declaration of Independence to proclaim independence from Great Britain and the King’s rule. These men put their lives on the line. And it required an eight-year Revolutionary War to finish the deal.
Change is never easy. In 2006, after many years working at a large Wall Street investment firm, Wendy Wildey and I left to establish our own independence as financial advisors. No shots were fired, and no one was hurt. Nevertheless, our road to independence was fraught with peril. This is the story of that dangerous journey and the three primary risks we faced.
The first risk was that our clients wouldn’t follow us along this new and uncertain road. As mentioned earlier, change isn’t easy. Inertia is a strong force. It might seem easier for some clients to stay put at the large firm, even without their familiar financial advisor. However, our fear of clients staying behind was unwarranted. In the end, the vast majority of our clients decided that our independence was better for them and made the transition with us.
Why was our independence better for them? We were free to focus solely on their needs and best interests. We’d no longer be influenced by anyone or any firm with other agendas. We could identify and offer less costly, more efficient investments. And, we were free to reduce our fees because we didn’t have to carry the overhead of a large firm—most of which doesn’t add much value anyway.
The second risk was that of starting a new business. Every fledgling business has its challenges. Many fail within the first few years. Office space must be secured. A lease must be signed. The lease must have a personal guarantee by the business owner (me). The office requires furnishings and equipment. Include employee salaries, and the start-up costs add up. Much of these costs are incurred before the first dollar of revenue appears.
In this case, I had savings to provide enough capital to finance the early stages of our independence. And, we found a banker who believed in us enough to advance a line of credit in case it was needed. Of course, with a personal guarantee.
The final risk was that the investment markets would decline in value—a risk that was totally out of our control. When the markets decline, our revenues decline along with them. We truly share in everyone’s pain of loss. On the business side, our overhead expenses are largely fixed and don’t go down. This danger was realized in 2008–2009. There were a few rough patches in there, but we helped our clients get through it while we pulled up our boot straps to make it through as well.
Fast forward to today, 13 years later. There are no regrets. It’s been an incredible journey. The HearthStone team has grown from two individuals to six.
I’m sometimes asked, “Would you do anything differently?” My answer is always the same: “I wish I’d made the move sooner.”
Yes, change is never easy. In our case, it took the right time and the courage of our convictions to choose the road less traveled—the road to independence. And it has indeed made all the difference.
Two roads diverged in a wood, and I –
I took the one less traveled by,
And that has made all the difference.
—“The Road Not Taken” by Robert Frost, 1874–1963