Leo Kelly is the founder, CEO and managing partner of Kelly Wealth Management at HighTower, a nationally recognized wealth management firm located in Hunt Valley, Maryland. With CFP® and Certified Business Exit Consultant™ status, Leo advises a wide range of wealthy individuals and organizations, from corporations and foundations to family-owned businesses and professional athletes. Prior to his current role at HighTower, Leo was a wealth management advisor and managing director of investments at Merrill Lynch, where he earned membership in the prestigious Circle of Champions. Known as one of the top independent advisors in the U.S., Leo is a regular contributor to CNBC, Fox Business TV, The Wall Street Journal, Bloomberg TV and Bloomberg Radio.
Q. What inspired you to leave Merrill Lynch and start your own firm?
LEO KELLY: We always had a dream, some of my partners and I, about starting an independent practice and having the ability to work with clients in an unconflicted fashion and go out and find the best people with the best character in the marketplace and bring them in, pull ‘em together, and, in our opinion, it has always been that if we pull the folks in our business with the best character, who do the business the right way, and we put them together in one place, then we’re going to have a successful business.
Q. What factors in the market have influenced your success?
I think one of the other obvious factors is after the financial crisis in 2008, 2009, I think that was our period of discovery. The marketplace was completely disrupted, and I won’t say that it caused us to leave, but what it did is it caused us to look, and when we looked around, and we looked at the independent marketplace, we decided that’s how we wanted to have relationships with clients: on a fiduciary independent form.
Q. Tell us about the fiduciary model.
I think the fiduciary and independent model is essential in the marketplace today, and it’s our hope—HighTower’s hope, Kelly Wealth Management’s hope—that we’re going to drive change in the entire business and really force that on the whole market. The concept of a fiduciary means you legally have to put your clients’ interests ahead of everyone else, and I think that’s common sense, and that’s what every client wants: they want independence, they want to know that you put their interest first. What a client wants to know is that when I sit down at the table they know with absolute confidence I come first and, secondly, that I am not compensated or I am not incented to make a decision for any other reason than this is what’s going to work best for you. You have to find the person that you’re comfortable with, that you trust, and whose resources meet your needs.
Q. What differentiates Kelly Wealth Management from the rest of the industry?
A. Our view of the financial services industry is for decades what the major wire houses [broker-dealers] did was they took the separate pieces of the financial services world, and they pulled them together. So, there’s custody of assets, keeping your assets safe, transacting business; there’s manufacturing, is what I call it, where you’re making financial products for people to consume to generate returns they need to be successful; and then there’s advice. I think what the industry has done is it’s pulled all those together and tried to create a one-stop shop. And, what our view of the world is, is that let’s just—let’s provide advice. Let’s have a relationship with the client. Let’s not sit across the table from the client and sell, let’s sit on the same side of the client, and let’s go out to the marketplace and buy.
Q. How do you work together with the wire houses?
A. The wire houses are essential to this business. They manufacture product for us to consume to meet the goals of our clients. And so, if we separate those pieces of the business and make them compete for our clients’ business, well, then the client makes out. At the end of the day, I think if you were to ask the client, “How would you create the financial services business?” This is what they would ask for.
Q. How has technology disrupted the financial services industry?
In the past, the bigger, more sophisticated teams were at the wire houses because they had the infrastructure and the platform to operate a business that required certain levels of sophistication. And, what’s happened along the way is technology is a disrupter, it has always been, and it will continue to be, and the disruption in our industry is technology has created a platform for us now to be able to run that very sophisticated business, to go out to Wall Street and pull in anything we need regardless of the size of client. Now, we can be that team. The combination of high-level sophistication, an awful lot of human resources, as well as technology resources, with independence, becomes a very, very attractive option for clients. So, we’re just thrilled that people are starting to understand our story.