22The founders of Cornerstone Wealth share a passion for helping clients achieve their financial goals. It all started with collaboration. Andrew Smith, Brian Needleman and Jeff Carbone managed individual practices while working together at a former brokerage firm, and as their practices grew, they realized the value of working together and decided to pool their complementary expertise and build a team-based business in 2001.
Each partner brought a different perspective and skill set to the team; each shared a vision of building a world-class wealth management firm offering independent and unbiased advice with focus on building lasting client relationships.
Today, the firm manages assets in excess of $1 billion and offers comprehensive wealth management services through a team of 22 wealth advisors and 27 professional staff members. The firm is growing at an average of 25 percent per year by acquiring new clients, establishing new offices, and hiring experts in various sectors of the financial industry.
Building a Team
“It’s our business model that makes us different,” Smith says. “Not many people can accomplish what we’ve done together. Our business revolves around relationship management, so it is important for our team of advisors to be in front of our clients. By leveraging our infrastructure, we liberate advisors to do what they love—serve clients.
“Our success has definitely come through working as a team,” Smith continues. “We strive to understand each person’s strengths, and we allow people to focus on their passions. There are advisors and employees who enjoy client acquisition, while others enjoy the operations side of the business.
“Having the right people in an organization is imperative, but it’s also important have them in the right job. We believe that if you have passion for what you’re doing, you’ll do well.”
The division of labor came naturally to the founders.
“Jeff Carbone had been a certified financial planner,” explains Smith, “so he handled the financial planning. His specialty was financial and estate planning, so he brought a comprehensive approach to the firm.
“My passion is client acquisition, so I handled marketing and business development. Brian had many years of investment management experience, so he managed our client’s portfolios. The three of us specialized in these areas and formed a cohesive team.”
The fourth managing partner, Craig Rubrecht, joined Cornerstone in 2003, after leaving Prudential Securities. Rubrecht brought many years of advisory and management experience which was needed in the growing organization.
“As it happened, we formed our company after 9/11 when people were worried about their money,” continues Smith. “We made an effort to get out in front of as many people as possible, and it worked. I believe we were in the right place at the right time, but we also worked smart.”
Notably, says Smith, while other firms were reluctant to engage clients, the group acted proactively in the environment and landed dozens of clients who were accepting early retirement plans from such companies as AT&T and Duke Energy.
“The market rebounded strongly in 2003, so our clients thought we were miracle makers,” laughs Smith, 43, who was in his late 20s when the company started. “Our niche was the utility and telecommunications industry early on. Since then, our business has grown dramatically to include clients from all backgrounds. Today, we are diversified across retirees, business owners, executives, independently wealthy clients and athletes.”
A Model for Success
Cornerstone’s distinctive model involves expert specialists who handle the business details, such as operations and asset management, so that advisors in the field can concentrate on building relationships with clients.
“That’s what makes us different from most firms—our culture of teamwork,” Smith says. “We support our team of advisors so they don’t have to do anything but manage the relationship.”
About half of the firm’s 45 employees work in its Huntersville headquarters, while the others are in branch offices of two to five people each. The firm recently hired chartered financial analyst Chris Zaccarelli from Goldman Sachs as their chief investment officer.
Smith remarks, “There are certainly many companies moving their workforce to Charlotte, and Chris liked the area and the wonderful climate, but it had to be the right opportunity for him.”
Cornerstone has offices in Huntersville, Charlotte, Greensboro and Belmont, N.C., as well as Greenville, Lexington and Aiken, S.C. In 2016, the company will establish offices in Raleigh, N.C., and Lexington, S.C., continuing its growth throughout the Carolinas.
“Internally, I would say two areas are growing rapidly,” Smith continues. “The high net worth area is growing rapidly. We are finding these clients want the level of service we provide. The other we refer to as ‘money in motion,’ whether it’s people retiring or passing money to the next generation.
“It’s really coming at us from every direction. The baby boomers are where the majority of the wealth is,” Smith points out. “They’ve accumulated it and many of them don’t need it, so we educate clients on how to pass it to the next generation. You can either spend it during your lifetime or give it away. If you don’t anticipate using it, there are many strategies to benefit your family or charity.”
Gifting and estate planning can have greater impact than a will, which covers only parts of the estate that are not already designated by beneficiary designations and other instruments.
“That’s where we come in,” comments Smith. “We educate people about the various strategies available and bring in other professionals as needed.”
Cornerstone Wealth has its own apprenticeship program to recruit and train promising young advisors to work for the firm. So far, 11 advisors have completed the program which includes two years of training, mentoring by the partners and working with clients. Many of these advisors have earned the certified financial planner designation and other certifications.
“It’s a challenging but rewarding career,” Smith says. “We try to find those who want a career in the wealth management industry and help them grow as advisors so they become lifelong advisors of the firm. We even provide a pathway to partnership in the firm, similar to the structure of a law firm.”
Smith says the firm’s assets, which topped more than $1 billion under management (AUM) last year, is expected to double in the next several years. It has grown about 25 percent a year, roughly half by organic expansion and half by acquiring existing practices.
“We want to grow at a healthy pace,” Smith remarks. “Our future expansion will come from a combination of organic and inorganic growth. There are many future retirees and other clients looking for a wealth management team like ours, but there are also a lot of advisors who are looking to retire and need a succession plan. Both of these are attractive ways to grow our firm.”
Cornerstone Wealth has implemented various succession plans with financial advisors looking to exit the business. The firm has also transitioned advisors into the practice with the intention of remaining a part of the team. Some advisors desire a hybrid model, where the advisor stays in the business and transitions their clients to a new advisor(s) over a period of time.
Says Smith, “Finding a firm that can handle all of these scenarios is difficult. We offer a tailored and turnkey solution for advisors.”
“For our organization, the No. 1 issue we’re going to face is change in the regulatory environment,” Smith remarks, adding that Cornerstone has created a chief compliance officer position because, “We’re finding that we need more focus to keep up with these changes.”
“We’ve also hired executives to handle the operational aspects of the business. Three years ago, we hired Terri Fiessinger as our chief operations officer to help manage the advisors and staff in our multiple locations. This is critical role in our firm, and she has done a fantastic job.”
Cornerstone Wealth, a Registered Investment Advisor (RIA), offers three custodians—Charles Schwab, LPL Financial, and Fidelity Investments. “Our infrastructure is large enough to handle that,” Smith says. “It makes it easy to do business with us, whether you are a client or an advisor looking to join the firm.”
Many advisors joined Cornerstone during the recession, when the firm maintained its commitment to clients and weathered the downturn successfully.
“Of course, 2008 was the deepest dip in recent history,” Smith acknowledges. “We made our way through it by holding client events and programs. We got in front of our clients to educate them. It’s important to stay the course during volatile times: Our clients listened and were rewarded.”
A Comprehensive Approach
At Cornerstone, both advisors and portfolio managers work together in a rapidly-changing market that demands constant attention.
“This part of the business is extremely important,” Smith says. “You can’t just buy and hold any more. That’s not going to work. You have to understand what’s going on in the world and the economy. These days, that global economy includes issues in China and Europe, as well as the strength of the U.S. dollar.
“The challenge that we’re faEcing right now is that we have a global slowdown,” Smith begins describing a host of issues causing volatility. “Part of this is due to China. They overbuilt—they built cities with nobody in them. Now all of a sudden they have this real estate glut. Even so, there are going to be certain industries that benefit from the 1.3 billion people who live there.
“At the same time, Europe faces a refugee crisis and terrorist fears while it struggles to rebuild its economy.
“Meanwhile, the U.S. has stopped printing money and our dollar has gotten quite strong against other currencies. From a currency standpoint, your dollar would go a lot further today, which impacts trade profits.
“There are many external factors,” Smith adds. “There’s terrorism and cross-border conflicts we need to keep in mind. We’ve lived with this in the past, but now their literally on the news every day.”
Cornerstone Wealth holds client events at all of its locations twice a year—with updates on markets, the economy, and financial planning concepts as well as motivational or topical speakers.
There is no doubt that at Cornerstone Wealth, their passion for serving their clients is the fundamental cornerstone of their success.
“Clear, concise information shared frequently…Engaging interaction between brokers, counselors and clients providing more meaningful strategies to best serve client needs…Constant analysis, research and educational support to stay abreast of global changes and how those changes affect portfolios—at Cornerstone Wealth, we endeavor to keep people informed and aware of changing market influences, market disruptions and significant business trends,” says Smith.
“Collectively, our passion drives our work ethic to not only meet, but to exceed expectations.”