Insights

Advisors have been vehemently encouraged to break away and stand on their own, defying a source of oppression (the wirehouse). Empowering advisors to be independent and highlighting the need for registered investment advisor (RIA) firms to better meet clients’ needs, does not mean being independent is doing everything alone. Going independent entails an immense amount of work that, depending on the size of the practice, can quickly become untenable. We like to offer an alternate vision for advisors to consider when pursuing the independent model.  

Everything supposedly changed post-pandemic except the financial advisor’s role and how they drive new business. The contrarian view was part of a keynote session titled “Growth & Client Acquisition in 2022 & Beyond” at the Retirement & Longevity Summit in San Diego on Monday morning.

Women are a growing economic force in the world, controlling one-third of all wealth. Yet many wealth management firms and the industry as a whole continue to misunderstand the needs of women investors leaving them underserved.

According to a 2019 study, small businesses use an average of 40 different apps. This number grows  to over 200 for enterprise-sized companies and can include many with overlapping and duplicative functionality due to merger and acquisitions that pile layer upon layer of tech debt.

Principals of advisory firms know that if they want to monetize their practices, there may be no better time than right now. The reason? An 11-year bull market has driven valuations for firms into record, and possibly unsustainable, territory; a coming increase in taxation on capital gains makes holding off on a sale risky; and a fiercely competitive market for more valuable, high-net-worth clients is prompting growth-minded firms to broaden their offerings with in-house estate planning, tax preparation and trust services.

Financial advisors considering an independent move should cast aside any delusions that it’s easy, according to RIA coach and entrepreneur Penny Phillips. Phillips and advisors Michael Brown and Brian Flynn launched a new practice management-focused RIA aggregator called Journey Strategic Wealth at the beginning of the year. Entering a crowded sector that Cerulli Associates pegs at an estimated $2.8 trillion worth of RIA assets available for purchase over the next decade, Journey unveiled its first deal earlier this month. Despite an influx of private equity capital that’s fueling record consolidation in wealth management, advisors often need more education about the options available to them and the realities of making the transition to independence, according to Phillips.

On this week’s episode we speak with Penny Phillips, President and Co-Founder of Journey Strategic Wealth. She has extensive experience coaching and consulting financial advisors, business owners and wealth management institutions on assembling the resources and tools they need to powerfully serve clients. The pandemic has altered the way advisors interact with clients. Phillips observes that “everything is changed and nothing has changed” for advisors. She characterizes the developments of the past year as more of an evolution in the client journey.

A lot has been said in recent years about fee compression and new fee models for investment advisors, but not every fee model works for every RIA firm and every client, according to the founders of three RIA firms who spoke Wednesday in an online “Discussion on RIA Fee Practices and Trends.” “I’ve always been a stickler on fees of all types,” including mutual fund fees, where some firms “charge way too much money for what they do,” said Rick Ferri, CEO and founder of Ferri Investment Solutions in Georgetown, Texas.

Advisors should try to focus on those parts of the business that they like the most and are the most skilled at, turning to other team members or outsourcing the parts of the job that they don’t like or know much about, industry executives said Friday during an online Riskalyze RIA Roundtable event. “Don’t be a lone ranger” or attempt to be a “Jack of all trades” who does everything on your own, said Marty Bicknell, CEO and president of Mariner Wealth Advisors, offering advice to those just starting out in the advisory business.