Skye Advisors' Clients: You Don't Need to Do Anything...Just Stay Informed
Updated: Jul 29, 2020
This week our Smart Skye Thoughts edition will focus on the letter you recently received from George Gay, CEO of First Affirmative (FA). I am sorry for the delay in sending this out, but I wanted to have the facts before I wrote you.
Find FAQS…Frequently Asked Questions, on the next page.
Last November as I was leaving SRI in the Rockies…the largest assembly of Socially Responsible Investment Advisors in the country… a rumor ran like wildfire through the hotel lobby. It spilled out into the parking lot of the Broadmoor Hotel as we were saying our good-byes: “FA’s parent firm, Folio, is on the auction block and Goldman Sachs (GS) is a likely suitor!” We drove off in separate directions speculating on what this would mean to us and our clients: I knew that 2020 could be a year of change but my optimistic inner voice said; “You know, not all change is bad!”
Over Thanksgiving, First Affirmative sent out a letter you needed to sign. I sat at my father’s dining room table in Kerrville, Texas and emailed you about what I saw happening. I figured that by the time this rumor hit the Broadmoor parking lot it was most likely going to happen. Where there is fire there usually is smoke and now the trick would be not let the smoke get in our eyes.
While there was much I didn’t know, I did know one thing: I launched Skye Advisors and went through the hoops I have gone through so you and I would never be controlled by a large firm again.
In between turkey dinner and the Cowboy football game, I emailed you to expect a “Negative Consent Amendment” (NCA). This NCA amended only one paragraph in the Investment Agreement you signed when I launched Skye Advisors. This NCA pertained to clause that clients could not “be assigned” …AKA “sold” …without them agreeing to join the new firm.
I knew that an NCA was more of a formality but I began to focus the options we had for going forward. What changes might be facing us? One of decisions I made when I launched Skye Advisors was to never build my business on just one company to make life easier. This approach took more time and cost more but it would give us the ability to flex when we needed to.
Like putting a jigsaw puzzle together, I started with the corners, added the top, bottom and sides, and then began filling in the middle. I would then be able to replace any piece that no longer was the best solution for you. I built Skye Advisors one piece at a time, vowing to never be vulnerable to a big company roll-up or Wall Street attempt to make money at our expense.
So, where are we today? As you can imagine, we’ve had many internal conversations. First Affirmative was already a wholly owned subsidiary of Folio, so all that has changed is there is one more layer of ownership...albeit one that might make us grit our teeth. ☹
Initial conversations with the FA folks leave me with the possibility that Goldman will support us when we need it and for the most part, leave us alone. In this FAQ on the next page, you will find some of the questions I’ve been asked; please send me others you have. I know we will always be fine if each time we make a decision, I always put you first.
As CEO of First Affirmative, George Gay wrote in his most recent client letter: “Over the years, we have been focused on directing the flow of capital in more positive, healthy and transformative ways. We appreciate your allowing us to serve you with our lens of doing well while doing good.
FAQ FAQ FAQ FREQUENTLY ASKED QUESTIONS FAQ FAQ FAQ
Here is the story: NEW YORK (Reuters) - Goldman Sachs Group Inc plans to buy a boutique wealth management custodian and technology company called Folio Financial Inc for an undisclosed amount of money, according to a letter that Folio sent to its customers on Thursday and was viewed by Reuters.
Folio would be the second wealth management company Goldman has acquired in two years, following United Capital in 2019, and it fulfills CEO David Solomon’s goals to build out the bank’s other businesses. Folio’s Digital Wealth Platform is a modern, digital wealth management platform that is leading the next evolution of advice for investors, brokers, RIAs, asset managers and banks.
Q. I know you forewarned us about this last year. I never thought that First Affirmative would do a 180. Talk about totally foregoing your values. Oh well, what does it really mean? Seems like that form we signed back then created a bit of a firewall. Should we worry?
A. When you are an early adopter other companies that are behind the curve scramble to catch up and the easiest way is to buy their competitors. The joke is that Goldman (GS)execs will be wearing tie dye shirts before this is over! When I heard that GS was a potential buyer of FA’s parent firm, Folio…my first reaction was negative too. Another recent acquisition GS in 2019, United Capital, has been left alone as they were before acquired by GS. George Gay, FA CEO has been working with the GS folks and he is hopeful they intended to keep FA as it now stands. You know, Folio bought First Affirmative in 2016 and has not invested in reporting or the Schwab platform and I have no love lost for Folio! GS might be better “Parent” than Folio was!
Q. Goldman “Sucks…” what is going to happen to us?
A. While it would be easy to say, “don’t worry,” the reality is that change is nerve-wracking: I know! I remember when I was “Money Maps” and I officed (and banked) in the bank building at 48th and Lewis. The bank was merged 4 times in 2 years and after the 2nd merger they just bought labels rather than pay for new stationary as banks were being rolled up everywhere.
I took the rumor seriously last November and I began to develop my alternatives. I have always had the option to use my Skye Advisors LLC RIA and go directly to Charles Schwab like I did with Patterson Icenogle and Money Maps! When I launched Skye Advisors I chose First Affirmative because they used Schwab and I knew they would be a very good partner for you. Moving from Mariner to Skye Advisors was simple and we can do the same thing again with Schwab!
Q. I got a letter from First Affirmative…yesterday which I'm sure you know more about this letter than I do…Just wanted to ask a question……does this mean I can no longer be with Charles Schwab?……Is this a better route to take with Goldman Sachs?…just wanted your thoughts on it.
Since 1986 I have changed firms when the old company no longer was the best option for you and me: this is just how the investment industry is. I was the one constant and as one client said, “In Julie We Trust.” You have seen me start my own RIA while I was at Patterson Icenogle; launch Money Maps; join Heritage Trust and after a few more stops along the way, I’m back with owning my own firm again. Each time I changed firms I knew more, brought you more value and was more confident that I could take on Big Finance.
Moving from Mariner just meant signing some papers and we have the option for Skye Advisors to go to Charles Schwab if that is the best option for you!
Q. So, what’s next?
A. The reason First Affirmative sent so many Non-Consent Agreements to you was they hoped to have updated advisory agreements back before an actual acquisition occurred. Once you modified your Advisory agreement, you would not need to do anything else if Folio was bought.
A lot has happened since the financial collapse in 2008 when Goldman Sachs was involved with some pretty ugly self-dealing and abusive lending practices. Today, new management is younger, more diverse and on board with the corporate social responsibility that is at the heart of Sustainable Responsible Investing. Log on and see who they are today: https://www.goldmansachs.com/citizenship/corporate-engagement/
So, these are some of the outcomes I see:
1. Goldman is the premier investment banking firm they are billed as and we are thrilled.
2. When we get into the belly of the beast we might both agree that Goldman Sucks.
3. We might be pleasantly surprised with new software and the financial products we gain access to.
4. There might not be any real changes, and nothing is different.
There are some changes I would like to occur, so as a pragmatic optimist, I am going for #1 and #3.
What WILL NOT HAPPEN:
1. You will not be turned over to a sales assistant: I will always be the face of Skye Advisors.
2. You will not become a client of Goldman Sachs.
3. You will not be folded into United Capital.
4. Skye Advisors LLC will never be for sale to Goldman, United Capital or anyone else.
5. The only changes will be ones that benefit you and that we both want to see happen.
6. Your fees will not increase and I will continue to work to reduce fees and investment expenses
We all are feeling raw and more than a little bit overwhelmed with the social unrest, Covid 19 now and this. Just know, we will always be better together! I look forward to connecting with you on Go-To-Meeting: it will be good to see your face!
Julie Skye, Principal, Skye Advisors LLC | 918.408.7981 | 36 E Cameron Street Tulsa, OK 74103 | Home Office: 1419 E 32nd Place, Tulsa, OK 74103 | firstname.lastname@example.org
To reach someone at First Affirmative please call Diane Conrad: 800.298.1890 x 0
For help logging onto your Schwab account please call the Schwab Alliance team: 800-515-2157