Welcome to the first in our series that features IRIS contributors on their business, views on the industry and more. Enjoy!
How did your career start?
As a broker for a boutique investment bank. It was like a scene out of the movie “Boiler Room.” My worst job; my greatest experience.
Tell us about how it’s evolved.
That role reshaped my professional goals. Originally, I wanted to be a stockbroker so I could make money for people. Ultimately, I realized that my passion and values were better aligned in helping investors reach their financial goals. The difference sounds subtle but the impact was transformational. In search of a firm that served client needs in a comprehensive, transparent and objective fashion, I discovered the world of independent Registered Investment Advisors. I’ve never looked back.
What brought you to become an entrepreneur and start your own business?
Partnering with smart, determined and purpose-driven advisors to launch their own RIA firm or enhance their existing firm is SO contagious to me. I admire their passion, their courage and their vision. I reached the point in my career where I wanted to be more entrepreneurial and spend my time working with that type of advisor and business owner, as well as the ecosystem that supports them. So in 2013 I set out on my own.
What were some of the challenges?
You wear every hat. Figuring out the best and highest use of your time is critical. Resource allocation. Where are the greatest benefits for my spend? Tunnel vision. Stay connected and get out of the office – consistently glean feedback and perspective from prospects, clients and industry contacts.
Now that you’re outside the corporate world, do you have a different view of it?
I underutilized the vast resources I had at my disposal. I have a greater appreciation for culture. The power of “team” is undeniable.
Could you go back?
It depends how you define “corporate.” If it was an incredibly entrepreneurial culture with a unique vision, keen understanding of the marketplace and an opportunity to have a profound impact on the RIA space, than I could possibly consider it. The value I create, how I do it, with whom and for whom is far more important than the number of employees or company status.
How did you come to specialize in advisors in transition?
As I evolved in my role as advice provider, my focus shifted from investors to advisors that were serving clients. Helping to create, or enhance, businesses that would better serve the needs of investors became my niche. In so doing, I became an advocate for the RIA as much as the investor. Professionally, there is no greater satisfaction than partnering with an advisor and helping him or her launch their own RIA. Assisting them in accomplishing this monumental milestone is the most gratifying and fun work I can do.
Talk about your category. What is an advisor in transition?
It describes a financial advisor or team that is contemplating the RIA model as an alternative to their current situation. Typically, they are successful in their own right and are either unable to do/provide something or, they are looking to assert greater control over some or perhaps many aspects of their business. Advisors in this state often express it as “I’ve outgrown my firm.”
If someone sees your category, what can they expect to read about? What do you hope they will learn?
I strive to provide a personal perspective on many aspects associated with the RIA. My hope is that the reader gains an appreciation for the RIA opportunity, can identify his or her own feelings and goals with the broader topic, and glean practical advice as to how to approach any of the items we discuss.
What are the kinds of things that you assist advisors in doing?
If an advisor wants to launch or join and RIA, we educate them about the opportunities, define their “ideal business vision, help navigate the process and connect them to the resources and partners they need to see their goal become a reality. We also work with select RIAs that are looking to enhance business outcomes via transition, sale, merger, acquisition and recruiting.
Have you noticed any trends recently when it comes to advisors in transition?
Advisors and Teams that are seriously considering moving to the RIA space tend to be larger in size and success than in past years. Size and success doesn’t necessarily predict the launching of one’s own RIA verus joining another entity. The ecosystem has evolved to offer some very differentiated and robust solutions that can be equally compelling to larger advisors. The “surge” remains a steady drip. (Although this year and next should be interesting as many retention deals expire.)
The Investor. Cerulli estimates that approximately 25% of all investors assets are currently managed by an independent RIA. As more RIAs are minted, and existing RIAs continue having success in conveying their value proposition, that number should only increase. Aspiring Fiduciaries. Your skill set, passion and creativity are highly sought in wealth management firms around the country.
Are hybrids gaining ground?
Yes. Research shows this is the fastest growing segment within the RIA space. What I’d like to see is how many hybrids still maintain their commission-based business say 3+ years after launching their RIA. No doubt, the commission-based solution is essential for many in porting an entire book of business at the point of transition. Interestingly though, there’s an increasing ability to convert many commission-based products to fee-based alternatives. Thus, for many RIAs, the need for a broker-dealer affiliation wanes as they and their clients become more knowledgeable about such substitutes. I’ll do some digging.
Are the wire houses staying pat?
No. Do they ever? But the statistics show they are losing share. Cerulli’s data shows that by 2017 RIA-managed assets stand to best that the wire houses. To address this trend, we have seen certain IBD’s launch RIA-platforms. And just recently the rumor surfaced that Wells Fargo Advisors may be contemplating something similar. The wire houses won’t sit idle.
Will they ever come back resurface to have the power they once did?
IF they do, I simply don’t think it can be in the same fashion. I think the possible scenario where they become the definitive preferred advice providers again is if they can craft an RIA offering that allows their existing FAs to function as true fiduciaries. And change their culture to embrace and reflect that obligation. And therein lies the rub. Doing what’s always in a client’s best interest is as much about DNA as it is about legal oversight. We’ve witnessed other large brokerage firms offer similar platforms and none of them have really taken off. Because moving from a “suitability” mindset to a “fiduciary” mindset is onerous, if not outright impossible, when addressing tens of thousands of financial advisors, not just a select few.
What are your predictions for the industry for the next two years?
Competition will heighten and prompt new fee and revenue models. An RIA-custodian will buy/offer portfolio accounting and performance reporting as part of their standard offer. Prominent IBD & Wire House teams will continue to launch their own RIAs, immediately joining the ranks of the largest tier RIAs. This will only strengthen the concentration of AUM among the larger firms. More RIA firms will reposition to strategically attract and serve younger mass affluent clients, with or without the help of robo-advisors
What do you enjoy most about your job?
Helping others fulfill their professional goals and dreams
How do you manage your time with being a mother and maintaining a career?
Life is a constant balancing act. Be clear about your priorities. Know that compromise means that at any given point one priority will lose out to another. But no priority can lose consistently. When you love what you do, it’s not called work.
What’s the one thing we should know?
I take my work very seriously. But I don’t take myself too seriously – you have to be able to laugh at yourself.
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