Wayne Edwards, a 24-year combat veteran of the U.S. Air Force, says that he learned from that experience how to think fast as situations change. “In air-to-air fighting, what you do depends on what’s happening at that moment,” he explains. “You have to make decisions about things that have an impact 30 seconds later, and by then you have to make another decision that might be completely different.”
That “fighter pilot attitude,” claims Edwards, who retired from the military at the rank of colonel, has served him well as a financial advisor, a career that, he hastens to note, does not involve life-or-death decisions, but does sometimes involve rapidly changing situations where critical decisions need to be made quickly.
His training served him well, he recounts, when, during the summer of 2011, while on a trip to Texas to visit friends, an assistant at the Park Avenue Community Bank in Valdosta, Ga., where he worked as an advisor, called to tell him that the FDIC was “coming today to close down the bank.”
Edwards snapped into action, making plans to return to Valdosta, and telling her to call back and report on what was happening. “She went outside and watched and, at 5 pm, she called back saying, ‘You won’t believe it! Six black SUVs just pulled up and the FDIC’s closing the building!”
Edwards knew that the bank had been in some trouble for a few years, in the wake of the financial crisis, “and I had wondered what I would do if it ever went under.” But he says, “The actual shutdown came as a complete surprise. Within 24 hours, the FDIC had changed all the signage to Bank of the Ozarks.”
The new bank that the FDIC had arranged to take over the failed Park Avenue Community Bank apparently wasn’t interested in having an investment program, or at least it wasn’t interested in him.
He called the bank’s main office in Little Rock, Ark., and recalls, “I got a lady on the line who said, ‘Are you the guy from Raymond James? You have to be out of the building in a week.’”
The next day, cooler heads prevailed, although the ultimate result was the same. He says he got another call from Bank of the Ozarks, this time from a supervisor. “She said, ‘Mr. Edwards, you don’t have to leave right away, but you do have to leave eventually. Take your time making new arrangements.
He found a new office in town and moved his operation in a deliberate fashion, going from a bank-based to an independent advisor for Raymond James. He notes that having Raymond James behind him helped considerably with that unexpected and sudden transition. The TPM had all his client records—a big plus.
“You know, when you’re in your mid-40s and you have a family and a new career building a practice, as I did, it’s a gut check to suddenly be told you have to move. I just decided: I’m going to succeed. I’m not going to fail.”
And succeed he did, bringing most of his clients along with him. In 2012, his assets under management were at $275 million. By 2013 it had reached $355 million.
Edwards, like a number of career military people, says he decided on financial advising as a career, ironically, because he thought it would be more stable. “Having moved the family nine times in the service, I wanted a job where I could stay put,” he says.
A friend introduced him to a manager at Merrill Lynch who had had a good experience with hiring retired veterans. He offered Edwards a chance to enter a broker training program. “I agreed to enter the program, but I explained to the guy that I’d also been offered a possible job flying 737s for Southwest Air. He said, ‘Okay, why don’t you start the training program here, and if Southwest calls, take the job. If you decide you don’t like it, you can come back here.’”
Two months into his Merrill Lynch training, Southwest did call, and Edwards went back in the air, flying 737s for six months. “But I wound up not knowing what city I was in or what time it was,” he recalls. “It was a great retirement job, but it just wasn’t for me.”
So he went back to Merrill Lynch, reentering the securities business in 1997, “just in time for the emerging market crash, and the dot-com bubble.”
Merrill Lynch closed the office he was working in, and he found himself out of a job.
Then came Park Avenue Bank. But then, after a few good years, the bank board hired new management, and the new managers didn’t care about his operation. They had other ideas.
“I discovered that the bank was running business, like insurance and bond management that they could have run through me. Either they didn’t like me, or they just didn’t care about my program,” he says. “So I figured, okay, I’ll just buy the operation from them.” Valdosta is a small town, and he didn’t want to burn any bridges, so he made an offer to buy the property for “several hundred thousand dollars,” but to stay in the building, leasing his office from the bank. “The bank still shared revenue from bank-referred customers,” he says, “so I had to segregate bank clients and clients from my own account.” That arrangement was in place and, he says, worked well —until the bank folded.
When Edwards moved his operation, he decided not to work with another bank. “I built my new firm, Southeast Investment Capital, from scratch,” he says.
That meant a new approach to building the business. “My model changed,” he explains, “because there were no more bank referrals. Luckily for us, by the time I left in 2011, we had established clients and a reputation, so there were still plenty of client referrals, but the process of getting new customers and building assets changed. Before, we never advertised much. Now we do some advertising. We’re also in civic groups and churches, using an under-the-radar approach to getting the word out.”
Edwards says his clients are “all over the board: Some have tens of millions of dollars in assets, some are kids with IRAs. Part of that is starting at a bank, I guess.”
Edwards’ experience with having a bank fold underneath him offers some lessons for other advisors in these tumultuous times for the banking industry.
“If you sense that there’s a problem at the bank,” he warns, “make sure you have an agreement in place early on about how your operation is going to be handled.” He notes that a bank can profit from an affiliated investment program, even if they don’t own it, “so I’d try to get the bank to switch their arrangement with you. Having you go independent and stay with them does shift the liability of the brokerage from the bank to you, which could be a selling point.” He adds, “Know your rights, who you work for, and who owns what.”
If you’re not owned by the bank, Edwards says, then you should make plans for how you would handle a bank failure. Is your office located on bank property? Maybe you should be looking for other office space. And if you are working for the bank, and the bank owns your business?
“Talk to them early about maybe buying your business from them,” he suggests. In any event, he says, “Try to sniff out early if your bank is having problems. I had warning that it might happen. Banks after 2008 were folding up all over Georgia. There was an FDIC list of troubled banks and Park Avenue was on it, but way down the list. Still, you wondered when it might move to the top.”
While he didn’t stay with Southwest Airlines, Edwards still flies his own private plane, and that is a plus for his advisory business. “I’ll still fly prospective clients down to Raymond James in St. Petersburg to meet with the experts down there,” he says. “So having that flight experience is helpful. And getting into the air is fun, it keeps that part of my brain going.”