John Charles Kernodle

In 2005, John Charles Kernodle launched Charlotte, North Carolina-based wealth management firm Strathmore Capital Advisors with just two clients and about $8 million in assets. It was a modest start for Kernodle, who had spent more than a decade working in the financial services industry as a salesman in the capital markets group at First Union and later as a business development manager for several investment management firms.

But Kernodle had bigger plans for Strathmore. From the beginning, he aggressively marketed the firm to prospective clients—sending out notices to scores of contacts, from old college friends to family connections. He networked and set up meetings to explain that Strathmore was designed to go beyond simply managing investments by playing a significant role in its clients' entire lives, from helping them reach their long-term goals to finding smart solutions to common financial problems. "I wanted to build a successful practice that would help people," he says. "The brokerage model is built on volume, but this is really a relationship business."

The idea of signing on with a financial advisory firm that would do more than simply send out quarterly statements has resonated with investors. One early client told Kernodle that the only personal visit he had received from his former advisor was after he told the advisor he was leaving for Strathmore. Today Kernodle has 14 relationships—including several families—and manages roughly $40 million in assets. In the short term, he aims to keep his wealth management practice small, making sure he has the resources to continue giving clients the proper personal attention. But Kernodle also hopes to grow his firm's asset base to $100 million within a few years.

To balance those goals, Kernodle realizes the need to be selective in choosing the right clients. To that end, he is targeting specific demographics that stand to benefit from Strathmore's personal service and will boost the firm's asset base. One such niche is physicians. It's a group Kernodle knows well, having grown up with a father and several uncles and other relatives who were doctors. In broad terms, physicians are a unique challenge. While they can bring significant assets to the table, they also frequently lead busy professional lives and don't have a lot of time to devote to managing their finances.

Kernodle and his brother William, the firm's director of business development and client services, recently began working with a busy radiologist who was more than happy to hand off the bulk of his financial responsibilities—from estate planning to tax planning—to Strathmore. "We brought in a lawyer and an insurance industry specialist, and the radiologist was so happy we were bringing in all these consolidated services, because he was so busy," says Kernodle.

Kernodle is also developing expertise in serving other client niches. He currently works with clients involved in multigenerational family business-es—a niche he plans to develop more in the coming years—and has helped several widowers navigate the estate settlement process. But whether he's working with groups of physicians or business owners, the strategy is the same: "It's all about being the personal CFO for the client," says Kernodle.

And while Kernodle stresses the development of personal relationships with clients, he's also careful to pay attention to the investment management side of the business. Before founding Strathmore, Kernodle learned invaluable lessons about retail operations through his work with a small North Carolina-based investment management firm—for example, that not all advisors have their clients' best interests at heart when making investment decisions. "I learned that what was being sold to the client and what was good for the client were sometimes two different things," he says. "There are a lot of great people in this industry, but there are also a lot of people who take shortcuts that don't help their clients."

The investment products offered through Dimensional Fund Advisors (DFA) immediately appealed to Kernodle. DFA's investment process didn't cut advisors in on commissions for products they sold, and took a relatively passive, low-cost approach to investing that put it at odds with the aggressive and often expensive methods adopted by many investment firms. "I thought it made so much sense," says Kernodle. "The simple fact is that the majority of the industry is predicated on what people think is going to happen in the markets. DFA says they don't know what is going to happen, but they know that historically stocks outperform bonds, value outperforms growth and small-cap outperforms large-cap over long periods of time. And you can engineer a portfolio that's tilted to those things."

As the firm grows, Kernodle is confident that Strathmore will continue to offer a broad range of services to its roster of clients. What's more, he believes that smaller firms like Strathmore will be particularly well-positioned to attract clients who are disillusioned with their experiences at larger firms. "What really excites me about growing the firm is that consolidated wealth management is not being done in that $1 million to $5 million range," he says. "If you have $1 million at a larger institution, you're given an 800 number to call. We can do much better than that."

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