Trouble at the top makes a mess of mid-tier advisory's great expectations. StillPoint Advisors, an Atlanta-based firm that tore out of the gates in 2004 vowing to establish a national practice while re-making wealth management for mid-tier millionaires, has gone out of business.

Atlanta-based private-equity firm Heritage Capital Advisors, StillPoint's principal backer, pulled the plug "a couple of months ago," according to Heritage's president John Ray -- after the start-up churned through more than $12 million in seed capital in two and a half years.

The number you have dialed...

StillPoint's website is still up, but its telephones have been disconnected. FWR attempted to contact all of StillPoint's principals and major backers for this article.

StillPoint was made up of two business units: StillPoint Wealth Management, a broker-dealer, and StillPoint Family Office, a registered investment advisory. The idea was to lift out fee-based wirehouse teams and up-sell family-office services to their clients, with particular emphasis on families with between $5 million and $20 million in investable assets.

As StillPoint co-founder Charles Ogilvie, an ex-executive with software maker S1, described the firm's mission in an April 2004 article in the Atlanta Business Chronicle: "I am talking about having someone acting as a trusted advisor that pays bills, hires domestic help, works on pre-nuptials or divorces, manages assets, moves assets, works out mortgages, who shops for insurance to make sure you're getting the best deal."

Strong start

From the start the success of the venture seemed to hinge on StillPoint's ability to scale its business effectively enough to provide services normally associated with bigger-ticket clients to low- and mid-tier millionaires. The technology side of this equation -- a tie-in of Pershing's transaction clearing and third-party investment platform with relationship-management and service-delivery systems designed by Coty Rosenblath and managed by Liz Brown -- was by all accounts adequate to the task.

And StillPoint was quick, initially at least, to build out its base. Within weeks of opening for business in March 2004, the firm lifted out a high-end Smith Barney team based in Boca Raton, Fla. In November 2004 StillPoint reeled in a former Merrill Lynch broker with an upscale book based in Little Rock, Ark.

Though StillPoint's strategic plan called for bringing in eight brokerage teams a year "through the next several years," as the firm told FWR in March 2005, the Little Rock liftout was in fact StillPoint's last significant grab on the brokerage side.

StillPoint sold its brokerage teams to Houston-based Stanford Eagle this past summer.

Big-ego people

Tony Greene, who helped launch StillPoint, headed business development for the firm and ran its family-office business from October 2005 until July 2006, says the firm suffered from poor oversight. "Primarily we had a bad board of directors," he says. "Though we were bringing in three or four families a quarter on the family-office side, they poured too much into the brokerage business and we never got the capital support for the overall vision."

Jeff Davis, who left myCFO's Atlanta office to found and run StillPoint's multifamily office, agrees that too little of the money Heritage raised to fund StillPoint's start-up went to the family-office side of the business. But what really did the firm in, he says, was "too many big-ego people" who paid themselves too much.

According to Davis, two of the firm's senior executives -- he doesn't name them -- were pulling in $450,000 a year, base.

"In a start-up, you either get a salary, stock options or ownership," says Davis. "You don't get all three -- I didn't then, I don't now, and the business owners I advise know that you build a business by putting the money back into the business."

Davis, who left StillPoint in October 2005, runs Atlanta-based Apogee Family Office.

Zingers

Greene has resurfaced as director of corporate communications at Reliance Trust, where he has an additional mandate to help build out the Atlanta-based institutional trust company's wealth-management strategy.

Heritage's Ray, who was also StillPoint's chairman from December 2004, agrees with Davis' assertion that some of StillPoint's brass were over-compensated -- but he counts Greene and Davis among them.

"Look, everyone's got his own perspective, and those guys were on the family-office side, so of course they thought we put too much emphasis on the brokerage business," says Ray. "StillPoint was based on a great concept, but management failed to execute."

Adds Ray: "Other firms -- Gary Ran's Telemus and a few others -- are making a go of this kind of business model. We just didn't."

Ultimately though, Ray acknowledges that the responsibility for StillPoint's failure rests with him. "I'm the one who put the money up, so I'm the one who fostered all their foolishness."

Ray says the StillPoint debacle isn't representative of a typical Heritage deal. -FWR

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