Advisor Success Story–Ricky Grunden

Ricky Grunden saw the rise of financial planning, and started his own firm to ride the trend.

Ricky Grunden has been at the fore­front of the financial services industry throughout his career: first as an early financial planner and later as an asset-class diversifier and wealth manager. Today, his firm—Grunden Financial Advisory in Denton,
Texas—is a leading provider of all three services and is generating strong growth even during the difficult market environment.
Example: Assets under management are up about 35 percent, to $75 million, during the past two years, and the firm recently acquired a $5 million client who was impressed with Grunden’s approach toward wealth management. Meanwhile, operating profits have grown by an astounding 75 percent.

Credit the wealth management business model for much of that success. Using the key wealth management strategy of serving a niche market of highly profitable investors, Grunden has pared back unproductive clients and is focusing on successful corporate executives in the technology industry (a large and attractive market in his geographic area). Focusing on a particular group of clients allows Grunden to become a true expert in the needs of his chosen niche—and provide a level of service that helps him stand out from other advisors. One big result: larger and larger accounts from new and existing clients.

Grunden grew up in Galveston, Texas, and started selling life and health insurance in 1974. He was on track to be a career life insurance agent, but as interest rates soared during the decade, he figured there had to be a better way. “The product only returned 3 percent or so at a time when rates were at 10 or 15 percent,” he recalls. “It was very difficult to ask young people to lock up a chunk of funds for a long period of time with that rate of return.”
Grunden says he finally decided that, as a matter of conscience, he couldn’t make such sales anymore. Early in the 1980s, he decided to become a financial planner. He didn’t know exactly what a financial planner was, he admits, but back then there weren’t very many people who did. Many, like Grunden, made it up as they went along—doing what they could to evaluate people’s holdings and give them some sense of alternatives.
In 1986, Grunden took on a partner and started offering fee-based financial planning. The firm evolved along with technology, which allowed for more independent planning services. As the industry matured, Grunden added an asset management business and began to enroll in various coaching classes to help move the business forward.

It was through these programs that Grunden gradually realized that his strength was in helping people identify their goals and how to best achieve them. Breaking with his partner, who preferred a more corporate model of business, Grunden reformed his company as Grunden Financial Advisory and moved ahead with the kind of client-centric services that he envisioned.

Another big step for Grunden was working with Dimensional Fund Advisors, an investment firm that puts modern portfolio theory into practice in a disciplined way. MPT focuses on risk as volatility over time. By mixing asset classes in certain ways, volatility may be ameliorated and the client’s goals better controlled. Grunden had been actively managing funds in-house, but the use of an outside asset allocator freed up his time so that he could concentrate even more strongly on supporting the needs of his clients.
With more time to spend on clients, Grunden focused on finding other coaching programs that would help him develop his practice. Through DFA and other industry groups, Grunden was exposed to CEG Worldwide and its wealth management approach to building advisory firms. He liked what he saw. “Wealth management has to do with bringing values in line with wealth,” Grunden points out. “There’s so much out there that provides linear financial services. Wealth management is holistic. It’s what we should be doing.”
Grunden is right. Technology has gradually co-opted various services that were once the broker’s purview. Initially, brokers offered stock tips as a wirehouse’s “customer’s man.” Later on, independent reps began to practice financial planning and asset allocation. But gradually, each of these arenas became commoditized to one extent or another. The most effective service that an advisor can provide to clients today is to help them “put it all together.” In this sense, the advisor takes a holistic approach to clients’ financial lives. Just as important, the advisor helps manage wealth in a way that enhances a client’s value system.

By choosing to focus on wealth management and stay ahead of the endless commoditization of financial services, Grunden has been able to add significant value to clients. “Wealth management is probably the final piece of the puzzle,” he concludes. “The process is inherently valuable, because it’s not a rote service that can be produced by software. It’s an interaction that cannot be duplicated, and it’s a big reason why we are so confident about the future. We know that no one can take care of our clients better than we can.”

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