Watch the video version of the full interview below:
Recording Date Jan 28, 2026
Chuck Failla and Chris J Snook | ATOMIQ LEVEL | Wealth Matters
Episode Summary
Chris J Snook welcomed Chuck Failla of Sovereign Financial Group to “THE ATOMIQ LEVEL” to discuss advisory services, Chuck Failla’s journey to financial entrepreneurship, and Sovereign Financial’s focus on independent advisors. Chuck Failla detailed their strategy for internal succession without private equity, the challenges of compliance in the independent broker-dealer model, and the structure of their “Align Alternative Access Fund,” a unique tender offer fund for high-net-worth clients. The participants agreed that the future of advisory services involves a consolidated “virtual family office movement,” with the advisor acting as a general contractor for financial, estate, and tax services.
Details
Introduction and Background Chris J Snook welcomed Chuck Failla of Sovereign Financial Group to the show, “THE ATOMIQ LEVEL,” to discuss advisory services for both advisors and high-net-worth clients (00:00:00). Chuck Failla shared their early aspiration of owning their own business, which they traced back to a young age, rather than wanting to be a sports or rock star (00:00:56). They explained that this early clarity helped them make decisions throughout their life to pursue this goal (00:01:47).
Motivation for Entrepreneurship Chris J Snook asked about the catalyst for Chuck Failla’s entrepreneurial drive, noting that Failla did not come from an entrepreneurial family (00:01:47). Failla speculated that their desire stemmed from wanting control over their time, contrasting this with their father who worked on an oil tanker and was often absent before passing away when Failla was 13 (00:02:36). Snook related to the desire for control over time but acknowledged the added responsibilities that come with entrepreneurship (00:04:11).
Path to Financial Services Chuck Failla shared that while they initially did not care what type of business they owned, they found their way into financial services through an internship in commercial lending at a bank, where they analyzed different businesses (00:04:53). The plan was to analyze various businesses and then choose the best one to start, but Failla’s path diverted after crushing a student fundraising campaign and then working on major accounts like the Metropolitan Opera, which brought them to New York City (00:06:23).
Transition to Wall Street and Independence Chuck Failla transitioned into cold calling at Lehman Brothers, the birthplace of cold calling, after being inspired by a friend (00:07:16). They enjoyed the direct correlation between effort, ability, and compensation in that environment. Unlike their peers, Failla banked their earnings to eventually start their own independent practice, demonstrating their focus on the long-term goal of ownership (00:08:52). Failla launched a fee-based financial planning shop at Raymond James in 1999 (00:10:51).
Challenges in the Independent Broker-Dealer Model Chuck Failla praised the independent broker-dealer model but noted that true independence can be limited, particularly regarding media and marketing work due to compliance challenges (00:10:51). Failla’s decision to form Sovereign Financial and move into the RIA space was driven by the difficulty of obtaining quick compliance approvals at the broker-dealer, which hindered media opportunities, such as providing quotes for the New York Daily News (00:11:51). They highlighted the benefit of having compliance staff on their payroll at Sovereign Financial, allowing for thorough but fast reviews (00:12:33).
Adviser Outreach and Compliance Hurdles Chris J Snook discussed their low conversion rate (3%) when reaching out to financial advisors for podcast interviews compared to startup founders (60% hit rate) (00:14:15). Failla suggested the low conversion might be due to a high proportion of broker-dealer advisors in the outreach list, as broker-dealers typically have more rigid compliance mechanisms (00:15:47). Failla explained that larger organizations tend to have more rigid compliance, and salaried compliance officers are often incentivized to say “no” to minimize risk, as there is “no real ROI in in yes” (00:17:29).
Sovereign Financial’s Approach to Compliance and Growth Chuck Failla emphasized that while compliance is rule number one at Sovereign Financial, they also prioritize being creative to help advisors grow their business, provided there are proper disclosures and messaging (00:18:58). Snook shared data highlighting the highly fragmented nature of the RIA industry, with 93% of 16,000 firms managing under $1 billion, and nearly half of all principals being over 55 years old (00:19:38). Failla confirmed that they, at over $1 billion in assets and in their late 50s, fit into this demographic facing succession decisions (00:22:54).
Succession Planning Strategy Chuck Failla shared their decision to pursue internal succession without private equity (PE), despite hearing about high multiples (00:22:54). They expressed their desire to continue focusing on strategic work, like launching new funds, and client interaction for another 15 years, but no longer wanting to handle day-to-day operations (00:23:43). Failla’s plan involves bringing next-generation leadership into the capital stack and providing them with equity, based on the belief that equity ownership drives commitment and love for the firm (00:24:39).
Implementation of Succession Through Seller-Financed Note Chuck Failla clarified that their internal succession model is not an ESOP structure, but rather a buy-in with a seller-financed note. They require a down payment to ensure “skin of the game” but finance the majority (70% to 80%) through a non-recourse note paid back via company profits (00:26:35) (00:30:46). Failla views this approach as demonstrating their long-term commitment to the firm, as their payout is dependent on the company’s continued success and growth (00:27:23).
Focus of Initial Equity Incentives Chris J Snook sought clarification on whether the equity buy-in was for advisors joining Sovereign Financial (00:29:08) (00:31:50). Chuck Failla made the important distinction that the initial phase of the equity plan is focused on retention and motivation for the operations staff, who are critical for handling the expected growth (00:32:51). Failla stated that equity for advisors will be round two, but for now, the focus is shoring up the platform’s operations because they view advisors as clients utilizing their platform (00:35:03).
Sovereign Financial’s Platform and Value Proposition Chuck Failla described Sovereign Financial as a platform with systems designed for cash flow-based financial planners using tools like e-money and Orion (00:35:03). They are agnostic regarding custodian relationships and currently integrate Raymond James, Chuck Schwab, and Interactive Brokers (00:36:49). The platform funnels all custodian data through one portal, making the operations efficient for advisors who want to focus only on planning work (00:37:36).
Client Experience and Advisor Focus Chuck Failla, who still runs a book of business, confirmed that the client experience is the number one priority in designing Sovereign Financial’s systems (00:39:59). They aim to make the platform easy for advisors to deliver a great experience to the end client (00:40:52). Failla shared a success story of an advisor with $110 million AUM who opted to join Sovereign, have all operational burdens removed, and focus only on the “fun stuff” to maximize their earnings before selling their book later, extending their career by ten years (00:41:47).
The Align Alternative Access Fund Chuck Failla introduced the “Align Alternative Access Fund,” a tender offer fund designed to provide clients, especially $2-3 million households, with diversified exposure to alternative investments through a single ticket (00:44:39). They explained that traditional methods often lead to highly undiversified alt exposure (00:45:28). The fund includes 17 top-tier alternative funds across various food groups like private credit, equity, and real estate (00:46:23).
Unique Structure of the Tender Offer Fund Chuck Failla highlighted the unique aspect of the fund: they waive the fund of funds fee, making it a pure value-add for advisors and clients (00:48:18). They noted that the firm, founded and run by an advisor, ensures that the systems and offerings meet high standards, with Failla personally being the first to invest a million dollars into the fund (00:47:31) (00:51:19). Failla noted that a comparable fund from a major wirehouse launched two months after theirs, reinforcing their role as a category creator (00:52:49).
Investment Strategy and Future Growth The tender offer fund operates as a tactical, managed index of blue-chip alternatives, allowing Sovereign Financial to add or drop underlying funds based on performance and market view, ensuring continuous rebalancing and oversight (00:52:07) (00:55:13). Chuck Failla noted that they are currently skewing allocations toward infrastructure (00:56:01). They view this tender offer fund as a massive growth engine, positioning Sovereign Financial strategically in the market for diversification and efficiency in alternatives (00:52:49) (00:56:44).
Sovereign’s Alt Fund Strategy and Vision Chris J Snook questioned Chuck Failla about the growth potential of Sovereign’s alternative (alt) fund, proposing a scenario of $10 billion AUM with $1 billion in alts. Chuck Failla confirmed that the alt fund, a 40-act registered investment company, is intended to be available on platforms like Schwab and Persian, expanding its reach beyond Sovereign’s advisers, making it an independent line of business with a competitive 50 basis point management fee (00:58:22). Chuck Failla emphasized that their ability to be “hyper competitive” on price, setting them apart from others, stems from the conscious decision to not involve private equity, which eliminates the need to cater to external earnings demands (01:00:53).
Competitive Landscape and Market Validation Chris J Snook discussed the timing of similar product offerings, noting that if larger firms like Morgan Stanley or BlackRock introduced comparable alt funds, even at lower fees, it would still validate Sovereign’s move and encourage broader market movement into alts (00:59:54). Chuck Failla agreed that a competitor entering the market validates their strategy because another entity is educating the market. Chris J Snook further pointed out that Sovereign’s smaller structure provides greater flexibility and nimbleness compared to firms with numerous stakeholders, enabling them to remain more personal as the market evolves (01:01:45).
Alts in 401(k)s and Investment Suitability The discussion shifted to the emergence of alts in 401(k) plans due to potential regulatory changes. Chuck Failla confirmed there is administrative appetite to allow alts in 401(k)s, despite ongoing debate (01:02:32). They stated that the primary decision for any investment is its suitability for the individual, regardless of the account type—IRA, trust, joint account, or 401(k)—though 401(k)s are arguably a suitable long-term location for assets like alts (01:03:18).
Liquidity and Opportunity Zone Fund Structure Chris J Snook inquired whether Opportunity Zone (OPZON) plays, which offer tax benefits like capital gains deferral, would be integrated into a tender offer fund structure (01:04:10). Chuck Failla expressed caution about integrating OPZONs into a tender offer fund due to the necessity of matching liquidity events with access, referencing the spectrum of liquidity from hyperliquid ETFs to illiquid draw down funds (01:05:13). Chuck Failla indicated that a drawdown fund, or a GPL structure, might be a more suitable vehicle for a long-term real estate play like OPZONs, suggesting that a tender offer fund might be too complex for such an integration (01:06:19).
The Future of the Financial Advisory Ecosystem Chuck Failla emphasized that advisory services are shifting toward a consolidated approach where end clients will likely receive financial, estate, and tax services under one coordinated structure within the next five to ten years (01:08:58). They envision the advisor acting as a “general contractor” to coordinate these different professional disciplines, even if the advisor does not personally perform the tax preparation or legal document drafting. Chris J Snook agreed, terming this trend the “virtual family office movement,” enabled by technology that provides a large family office’s infrastructure to families with $2 million to $20 million in assets, and potentially even smaller families in the future (01:09:41).
Conclusion Chuck Failla concluded by expressing appreciation for the format of the discussion, noting its success in blending different audiences (01:13:25). Chris J Snook proposed a follow-up episode to deep dive into the role of RIAs as integrators and how they can build their ecosystems, specifically focusing on best practices learned at Sovereign and how proactive partners like asset protection attorneys can effectively engage with their world (01:12:42). Both speakers agreed that the trend toward the advisor acting as an integrator is clearly “where the puck is going” (01:13:25).
