The Super-Sophisticated Boutique Model Taking the Industry by Storm

It’s safe, flexible and worthy of your consideration—even though some of the names may not be all that familiar just yet.

It’s just a few weeks into the new year and already I’ve met with a number of very impressive entrepreneurs – some I’d even call visionaries – who have launched or are about to launch serious and legitimate wealth management firms. Sure, with the industry climate as it is, this may not be such a surprise. But the real story here is that these firms are part of a whole different breed – a new-fangled and modern twist on RIAs – emblematic of how the industry landscape has expanded to address the changing needs of the advisor population at large.

While “quasi-independence” isn’t “new” – HighTower led the way with the model back in 2008 ­– the industry climate has been perfect for it to come into its own. A “quasi-independence 2.0” so to speak.

To be sure, independence has become all the rage because many uber-entrepreneurial advisors want what it offers: Ultimate freedom and control, ownership and the ability to build a brand and legacy. But, what of all those folks who are looking for more autonomy than what they’d see as employees of big brokerage firms, yet way less than being fully independent? That’s where quasi-independent firms come in.

The Quasi-Difference

The quasi-independent space (a term that is the best we’ve got right now but sorely underestimates how sexy, sophisticated and exciting it really is) is gaining steam and where most of the expansion in today’s landscape is happening. First Republic Wealth Management, William Blair, Snowden Lane and Steward Partners are but a few well-established examples of options in this category. Chicago-based Cresset Wealth Advisors, which launched in July of last year, and Greg Fleming’s soon-to-be launched Rockefeller Global are about as exciting as it gets and will surely attract the advisor elite with value propositions, partnership potential and deal terms that make them unique and well-worth consideration.

What’s the quasi pedigree?

Quasi-independent models are characterized by the following:

They’re boutique shops with W-2 models.

They offer aggressive recruiting deals, oftentimes a mix of cash and equity.

They typically offer partnership equity (equating to a meaningful seat at the table in building the firm).

They offer third-party custody with an institutional custodian (think Schwab or Fidelity).

They have access to a unique and amplified set of investment solutions.

They provide cutting-edge technology.

They are lead by industry stalwarts, who bring with them years of experience.

They have strong balance sheets due to capital backing by private equity or the owners and Board members themselves.

They provide the compliance and back office support that so many wirehouse advisors have come to depend upon.

Said another way, these models allow advisors to replicate everything they are currently offering their clients – from a product, solution, service and technology standpoint – at absolutely no cost or detriment to them. The less restrictive, more creative and entrepreneurial environment ultimately allows for a superior service model. And, in most cases, the horsepower of the leadership team is nothing short of spectacular.

So, what’s the hitch?

There really isn’t one, except the concern that some of the newer firms are just that: new. Will they get off the ground? What if they don’t execute on their plans? What if they can’t get access to the capital they need for sustained growth?

All valid questions, and for sure, some advisors (likely many early on) will run for the hills—or at least wait until these firms gain critical mass. But, the most open-minded advisors of the lot will join because they are looking for:

A ground floor opportunity to help shape and build a best in class firm.

Extra attractive early adopter economics.

The opportunity to be a lightening rod, enticing other like-minded advisors, who together can develop a stronger “team” environment and foster growth within this new culture.

A highly-customizable platform built to suit the needs of their clients best; one that is nimble enough, enabling them to grow their businesses as they see fit.

Related: Fact vs. Fiction: The True Realities of Independence for Financial Advisors

And, advisors know that, even in worst-case scenario that the firm they join implodes, they are still protected and here’s why:

The safe asset custody with a multi-trillion dollar custodian, and

An industry landscape that has expanded to offer support and access to anything and everything that an indy advisor could need. The very definition of open-architecture means that an advisor accesses best-in-class solutions, but is not beholden to any one of them. This creates a nimble and easy way for an advisor to plug in and unplug as need be.

Quasi-models are something to be excited about!

For years, advisors in sexy markets like Vail, Santa Barbara, Short Hills and Westchester, have said, “If a boutique firm had interest in opening in my market, I’d be interested.” To those folks, we say, “Your time has come.”

While the names of the firms may be somewhat unfamiliar at the start, they all offer similar value propositions: The ability to gain equity, plus a meaningful seat at the table to create something new and exciting—plus a great way to build wealth beyond just revenue generation on your personal book of business.

So if you’re feeling constricted by the big firms, but yet not quite “entrepreneurial enough” to go it alone as an independent, then this is a really exciting option. And, they are looking to open in virtually any market where a top advisor with a great business sits. So take some time to get to know the quasi-model and the players in the space—while the name may not be the sexiest, what’s under the hood is really worth talking about.