With Demand Comes Supply
A new breed of service providers has emerged, designed to cater to the needs of a growing population of advisors who have their sights set on independence
The breakaway movement has altogether altered the advisory landscape, and the industry has responded in kind to answer the needs of an ever-increasing number of advisors in search of the greater freedom and flexibility of independence
.For those would-be entrepreneurs who were excited to go independent but didn’t want to deal with the minutia of running a business, platform and service providers were born—ready to take on the heavy-lifting involved in launching and running the day-to-day operations of a firm.To fully understand the benefits that service providers bring to the table requires taking a look at the business of wealth management
itself, and the potential pitfalls that small business owners often face.
For instance: The cost associated with running a wealth management business is on the rise which translates to narrow profit margins for small business owners. Fee compression and increased competition for new business means that advisors need to focus more than ever on revenue-generating activities. Hiring talented staff is expensive and time-consuming.
As many non-DIYers would agree, service providers made launching a business possible when it might have been impossible before. But choices were limited until recently, with the $50 to $150 million advisor population being largely overlooked and underserved.For instance, the two most likely routes to independence for an advisor fitting this profile would have been to join an Independent Broker Dealer or tuck into an existing RIA. While both represent legitimate options, there’s a growing population of highly entrepreneurial, fiduciary-minded advisors with their sights set on the RIA space. That is, those who want to create a more customized business model with true open architecture—achieving the ultimate in freedom, flexibility and control.There was a time when most would agree that unless an advisor had at least $100 million in fee-based assets under management, it didn’t make sense to start an RIA. But service providers challenged that assumption and with demand came supply.This new breed of service and platform providers that caters to smaller independent practices has since emerged, offering a full suite of turnkey solutions to complement the services offered by the custodians. Often referred to as a “completion strategy,” these firms seek to replicate the resources and support of a full-service brokerage firm—all while allowing advisors to retain ownership and control over their businesses.Related: Culture is King When it Comes to Attracting and Retaining Advisors
With access to robust wealth management platforms, curated technology stacks, plus transition, compliance and operational support (including practice management and marketing), advisors are free to focus on revenue-generating activities such as client acquisition and retention. And in an industry where the cost of doing business is on the rise, joining a community of advisors with billions of assets under management translates to accessing goods and services at enterprise level pricing.Without having to give up equity or control, these networks allow advisors to build their own firms and make the pivotal shift
of moving from business operators to business owners—freeing themselves to spend their time focused on growing the business.An evolved industry landscape means more choice—and while some advisors may choose to go it alone, others may take on a partner to help them build efficient, scalable businesses. For a population of advisors that previously had limited options in the independent landscape, a new world awaits.