Updated Fri, Mar 28, 2014 8:59 am
Phil Ratcliff is doing something many financial advisors left behind long ago: putting the client’s interest first.
With a combined decade of experience with American Express Financial Advisors and then Axa, Ratcliff left the bigger companies to form Rebel Financial.
The chip-on-the-shoulder name says something about his new approach to financial advising.
He’s introducing a fee billing system to his clients.
In short that means he charges less than other financial advisors.
His model also prevents his company from directing clients' portfolios to sweetheart investments that help the company more than the client, a frequent but hard-to-detect occurrence in financial circles.
Ratcliff’s model means he’ll continually be a fiduciary to his clients.
“A fiduciary means you have a legal obligation to do what's right for your clients before yourself or your company,” he said.
That is not a role larger investment advisors embrace.
“Most financial companies spend a lot of time and money making sure that they or their advisors don't become fiduciaries because of the increased liability,” he added.
While most startups are programmed to grow, Ratcliff is promising to limit the number of clients at Rebel.
“I’m going to cap myself at 300 because I want to do a much better job of actually taking care of people rather than trying to fill the books as much as possible,” he said.
Ohio University, Ohio State and the University of Cincinnati are being targeted by Rebel for building its clientele to that number.
So far Ohio University has shown interest in the fee-billing approach but has been slow to get on board.
“Since it's newer of course a lot of the larger organizations want to see other people doing it, investigate things,” Ratcliff said.
He is working with Ohio University Human Resources to move the paperwork through the system to allow him to get paid for advising his clients.
But even though that’s not happened, he’s still working for some Ohio University employees – he’s just not getting paid.
“Exactly, so what I'm doing now is just proving the concept in showing how it would work and I'm taking care of my clients and then I'm working with the administrators to get this done,” he said.
“So [if] there's not going to be somebody out there to provide the concept and believe in it and just actually do it there's somebody just waiting for somebody else to make it happen a lot of things would never happen.“
Beyond his work with Rebel Financial, Ratcliff has formed a nonprofit organization to show similarly-minded advisors how to start their own firms.
“When you're talking about people's whole life savings [or] for a goal there should be certain rules that you need to look out for other people because you can still make a good profit and make a good living without having to maximize profits to somebody else’s detriment,” he said.
With the exception of some initial push-back from the larger firms Ratcliff said he’ll probably be permitted to pursue his client-first approach.
“… because I just can't take that many people and if I tried to grow to hire other advisors I would become them,” he said.
But in the years to come he might catch their attention.
“What they're worried about is the systemic risk that other people would see that my company is good and try to emulate it themselves and want to leave the company,” he speculated.
“If other advisors started looking and I helped them start practices and it threatened their actual model they might, but at that point I would be more stable financially to where they probably couldn't hurt me that much. “