Advisors in transition have reached a pain point needing a solution. They want a natural and easy solution to solve that pain point.

Examples of those pain points: Large wirehouses taking 50% or more of the revenue; stale RIA firms with no succession plan and/or a need for intellectual freedom in this new world; and more.

Any advisor in transition starts the search with the Internet. The success of any advisor in transition depends on 3 easy tips.

First, let's talk about why these tips work by looking at the past, present, and future of the financial advisor industry. 

Past, Present, and Future of the Financial Advisor Industry

Since the rise of custodial firms serving financial advisors (such as TD Ameritrade Institutional, Schwab Institutional) and the rise of technology, an advisor in transition have more options to practice their craft and to gather assets.

Using an advisor friendly trust company to assist in moving assets from a competitive corporate trustee to a financial advisor to invest the trust assets provides a never ending well of AUM opportunities.

The traditional large wirehouses such as Merrill Lynch reward the mega teams to the detriment of smaller advisors.

There are pluses and minuses to this.

Over the last 20 years, advisors in transition have three other options:

  • Become an independent Registered Investment Advisor
  • Join an independent broker/dealer such as Commonwealth Financial Network
  • Become part of an RIA aggregator such as Hightower Advisors, Dynasty Financial Partners, or Focus Financial Partners

The RIA aggregators remove many administrative duties and tasks required for any independent RIA such as operations, compliance, accounting, marketing, HR, trading, and more.

There are tradeoffs on the ownership structure and build-up of enterprise value once joining those firms. (That's a blog for another time.) An advisor in transition should consider the pros and cons of these firms and how they add value.

Any advisor in transition should consider the future landscape of the financial advisor industry. With the rise of the robo-advisor solution (i.e. Betterment, Wealth Front), a new benchmark for investment-only service fees has been set ranging from 20bp to 40bp.

Any advisor only offering investment advice will struggle to retain or to attract new clients if their investment-only fee is above those levels.

An advisor in transition should consider the key point of financial planning as the bedrock to their services. There are many options such as Money Guide Pro, eMoney Advisor, and more that can make this process leverageable and highly valuable to current and future clients.

The fee for those services can add another 40 to 60bp to the benchmark of investment only fees established by the robo-advisors.

An advisor in transition needs to consider the operational delivery of services and running of their advisory practice considering those fee benchmarks.

Schwab Institutional, TD Ameritrade Institutional, and other big industry names all offer advisors a robo- advisor services seamlessly integrated into any RIA practice.

The future of how fees are valued and measured by clients is here to stay.

advisors-in-transition-process Source: Fidelity Clearing & Custody Solutions

3 Easy and Essential Tips for Advisors in Transition

With the history spelled out, let's talk about the concrete tips you can use to as an advisor in transition. 

1. Be Honest and Concise of Why You Want to Make a Change

During transition, an advisor's focus centers around solving or removing a current pain point or frustration with their current employer and/or advisory firm.

The pain points could revolve around compensation, intellectual freedom, approach to client interaction, succession planning, cultural differences, poor service support from the current employer, and/or aged technology (among others).

Whatever the reason, an advisor in transition needs to clearly write them down allowing the change to resolve those issues. Additionally, the advisor should consider the soft issues relating to their current pain points.

A cultural difference in how the advisor believes clients should be treated versus how the current employer states how clients should be treated must not be ignored. The advisor, to bring the best of their craft to clients, must have an environment that their professional DNA matches the DNA of the new advisory firm.

The options of a new advisory firm could be an independent broker/dealer, RIA aggregator, or an independent RIA firm (new or established).

I create a matrix when making life changing decisions to ensure no points are left out. Studies have shown that if monetary compensation — different from succession planning — drives the advisor's decisions, then the new employer location will eventually bubble up with new pain points.

Compensation could be one pain point, but an advisor in transition must consider the other qualitative or quantitative pain points.

2. Decide Your New Firm's Focus

An advisor in transition needs to make critical business decisions on their allocation of time. In the purest form, any advisor needs to deal with regulator reporting, compliance supervision, financial planning, investment planning (e.g. passive vs. active which will another blog in the future), marketing, HR, technology, cyber security, book keeping and financial management of the firm itself, finding new clients, keeping current clients, and education on estate planning, taxes, insurance, investments and IRA accounts.

No doubt a long list.

Which of those items would any advisor consider themselves natural great at and super interested in?  Which would they rather delegate to a third party and what subsequent cost? 

Independent RIAs need to manage all those points. An advisor in transition considering an independent broker/dealer can delegate technology, cybersecurity, regulator reporting, compliance supervision, marketing, and some HR issues — similar to those advisors in transition considering an RIA aggregator.

3. Make a Marketing Plan

"People don't buy what you do but why". - Simon Sinek

Simon Sinek's seminal quote hits to the heart of any marketing for a product or service.

 Advisors in transition, regardless of their new employment location, need clear and concise reasons of why someone should use their financial advisor services.

All advisors know selling performance results in a DOA type of practice. Human nature rests on showing what we do and how we do it. That makes us feel comfortable because these are facts.

However, the human brain where the majority of decisions are made has no language capability. Have you ever felt, "This just feels right?"

Why do Apple users have a great loyalty than Samsung users? Apple has always presented the why and not the what.

Clients expect any advisor in transition or financial advisor to have mastered their craft.  Marketing plans center on digital marketing (website, LinkedIn, blogs, email communication), and traditional (presentations, webinars, centers of influence like CPAs and estate attorneys). 

Gathering new assets can come from centers of influence but also from unlikely sources.

For example, advisors in transition can work with an advisor friendly trust company. There are billions of dollars invested by corporate trustees and their clients want a better option which advisors can provide in collaboration with an advisor friendly trust company.

An advisor can go after those trust assets using a corporate trustee that does not compete against the advisor. These great advisor friendly trust companies can make changing a trustee easy and natural allowing an advisor to manage more assets quickly.

When a potential client visits the new website, what impression and what action do you want to give them? There are several goals: educate, convert to a client, or provide a solution.

I found this informative video from Donald Miller on what websites should communicate and achieve. Search the Internet on "what makes a great website" and see 2.5 billion results. The marketing plan and the communication of why you do what you do is the hardest part for any advisor in transition.

Any advisor in transition faces a multi-level decision process. Some of those issues are qualitative and others are quantitative.

It starts with the pain points, moves onto the allocation of your time and ends with your value add message of why you do what you do.

If you're considering working with an advisor friendly trust company, you have a lot of different options. 

However, even objective sources show that Wealth Advisors Trust Company is the top choice for today's advisors. 

Learn why for yourself.

Learn What Sets  Wealth Advisors Trust Company Apart