Advisor Growth Strategies

The goal for most advisers is to increase the size of the firm, both in assets under management and the number of employees. But as the late rapper Notorious B.I.G. once said, "Mo money, mo problems." The Alliance for Registered Investment Advisors, a think tank of entrepreneurs behind some of the most successful RIAs, discussed the setbacks of building a billion-dollar firm at the TD Ameritrade National LINC conference Thursday. The panelists agreed that growth requires talented employees, but finding and hiring the right people is often one of the hardest challenges. Read More

Brooke's Note: The most overused theme for an RIA speech is "the future of wealth management." Typically, such talks are neither about wealth management nor the future, unless platitudes about digital wealth count. But RIABiz marketing exec Graham Thomas's listening skills, powers of observation and follow-up interviews at last week's Summit yield a useful glimpse into how a swath of how the more successful and ambitious characters in the RIA business are taking their companies into the bright future of wealth management. These execs are coming off of adverse events in the past year, or years, and making halftime adjustments. Read More

Brooke's Note: Pity the reporter who writes about Ron Carson's new venture. Randy Diamond quickly learned there are so many layers and aspects. The question is whether what Carson has built is an advisory business maestro unveiling his master work in the prime of life at 53. Or whether The Orator of Omaha has created an organization in Carson Group and Carson Wealth Management with too many moving parts and too reliant on his giant personality. Not that Carson is asking those questions or betraying anything that sounds like doubt in an interview I did with him in the editing phase to be sure I was getting the whole drift. He kept returning the conversation to his vision, which includes soon having to compete with Amazon and other great data-rich e-commerce companies on price, web experience and marketing power. Carson discussed how he sat beside Mark Hurley at a Fidelity M&A event and got a refresher course on Undiscovered Managers. He buys the Hurley vision but on steroids with Amazon looming. Read More

CHICAGO - Two advisory firms can have nearly identical revenue and assets under management. Yet if one structures its business in specific, strategic ways, it can command more than twice the valuation of a lifestyle-oriented practice — even if the other firm is larger. "Characteristics drive value, not size," said John Furey, principal of Advisor Growth Strategies, at Charles Schwab's annual Impact conference. Read More

What does HighTower Advisors' $100 million recapitalization deal with private equity firm Thomas H. Lee Partners mean for the financial advisory business? It's a major endorsement of the RIA business model, industry observers agree, and underscores the massive influx of PE money into the space — and the subsequent questions those investments raise. Read More

Valuation multiples are based on a lot more than asset totals. RIA owners often ask “What is my firm worth?” Many believe valuation multiples are relatively uniform across the RIA spectrum. In fact, valuations vary greatly, and are driven by what we call “sustainability.” Sustainable businesses are marked by five elements: size, margin, an effective/differentiated growth strategy, scalability and professional practices. These elements interact in a virtuous circle to drive value. Read More

A large, successful Goldman Sachs & Co. team will spend more time tending radishes and tomato vines this summer than building an RIA after trying to make a breakaway that includes an ultra high net worth client as a financial backer.Read More

If you own a stake in a registered investment adviser, you probably spend time estimating what your shop is worth. With good reason.

Fees are coming down. Which puts pressure on annual compensation. Which makes equity stakes increasingly important to your personal wealth. Which means your retirement activities, whether you flip burgers in a greasy spoon or nurse fruity drinks on a Carribbean beach, depend on answers to three questions: Read More

While retirement plan advisers are gifted at planning for participants’ futures, they do a notoriously poor job of planning for their own—a situation that Jeremy Holly, senior vice president at LPL Financial in San Diego, finds supremely ironic. Many wait until they are close to retirement age before thinking about a succession plan for their practice, he says.

Why the inertia? “On the positive front, when financial advisers start their own firm, it’s because they love the profession. Years later, they still love it, and many don’t want to leave the profession,” says John Furey, principal and founder at consultant Advisor Growth Strategies in Phoenix. Read More

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 It’s not as easy as it looks.

That applies to both breakaway brokers and the platform providers who service them — a fact most recently underscored by the demise of Sanctuary Wealth Services, which will go out of business at the end of March.

After nearly eight years of helping breakaway brokers become functioning independent RIAs by providing compliance, reporting, investment management and consulting services, Sanctuary saw too many firms defect to keep the business going. Read More

Stanford had done its own succession spade work and its principals were willing to become workers in a Deloitte-cultured firm.

Brooke's Note: A billion here, a billion there ... sooner or later you're talking real billions. Aspiriant, with $10 billion or more in AUM, is what roll-ups aspire to be -- an RIA that serially acquires other big RIAs, or even smaller ones, at will. It does so by swapping its stocks for theirs.  Read More

The cost and complexity of developing effective compensation programs for advisory firm employees represents an ongoing challenge for firm principals. A successful approach to the issue is to focus on a top-down, strategic approach to compensation rather than bottom-up approach designed at the individual level.

That was the suggestion of IMPACT speaker John Furey of Advisor Growth Strategies, who focused on compensation and equity plans that he believes can drive excellence, not entitlement. Read More

The demand for advisory firms to grow larger and larger has some reaching out to strange bedfellows for financial support.

Best Buy founder Richard M. Schulze is among the investors who recently took a 25% stake in Meristem Family Wealth, a $2.35 billion family wealth management firm seeking to expand. Read More

How should firms distribute, determine and design compensation packages for advisers and support staff?

Compensation makes up the single largest cost for RIAs, according Schwab’s most-recent RIA Benchmarking Study, yet many firms do not have a well-defined incentive package in place to reward and retain talent. Read More

Brooke's Note: RIAs have proven to be mostly unbeatable because of their ability to evenhandedly quarterback financial challenges on behalf of clients. But when it comes to funding their own futures, RIAs have tended to seek off-the-rack solutions, which, by definition, do not fit all sizes. Keeping control is a big problem and can be a fatal flaw considering that control is at the heart of what makes RIAs not only great businesses but great places for self-actualization. Read More

Handing over one’s life’s work is a process at once emotionally taxing and strategically complex.

For advisers running their own registered investment advisers, having a long-term succession plan in place is critical to safeguarding the continued success of both the firm and the clients that they serve.

To ensure a smooth transition, the focus must be on building a valuable business that is attractive for sale and keeping all options open, said three succession experts during a Financial Planning webinar covering best practices for succession planning. Read More

For the last eight years, James H. Herbert II has been quietly working to upend at least two bits of RIA conventional wisdom: that RIAs can't be rolled up and that banks can't buy RIAs without belching them back out a few years later.

The CEO and chairman of First Republic Bank has overseen growth of the bank's wealth manager mightily enough by focusing on high-net-worth and ultrahigh-net-worth investors. Read More

Handing over your life’s work is a process at once emotionally taxing and strategically complex. For advisers running their own RIAs, having a long-term succession plan in place is critical to safeguarding the continued success of both the firm and the clients they serve.

To ensure a smooth transition, the focus must be on building a valuable business that’s attractive for sale and keeping all of your options open, said three succession experts during a Financial Planning webinar covering the best practices for succession planning. Read More

As an independent firm grows, the role of an owner evolves frombeing a player on the team, to leading and managing an organization. Eventually, size and complexity will drive the need for greater professional management to help drive the owner's vision. Firms facing this need have three options: have the owner move into professional management and reduce responsibilities, elevate next generation professional talent from within or hire professional management from outside.

Elevating internal talent may be the optimal path for some advisory firms. For most, it is likely a combination where talented next generation professionals are elevated within the firm, and outside professional management is hired as a compliment. If your firm is in need of a diversified management capability, consider elevating the next generation to create leverage and return for the current founders/owners.

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