AMG is Suddenly Among the Elite

When the AMG plan for rolling up RIAs started three years ago it sounded a little too good to be true. But now that ex-GS talent, John Copeland and his West Palm Beach, Fla.-based unit, AMG Wealth Partners, have signed a deal with Baker Street Advisors that will put their RIA/roll-up at $25-billion of managed assets, the second-act story is starting to look plausible for AMG.

By reaching the milestone, the firm is already among the elite and well ahead of efforts like Newport Beach, Calif.-based United Capital Financial Advisers, founded in 2005, which manages $10 billion, though way behind New York-basedFocus Financial Partners LLC and its $30-billion of AUM founded in 2006. Chicago-based HighTower Advisors LLC has just over $30 billion in advised assets after being founded in 2008. See: It won’t be long before HighTower’s fee-for-service channel revenues draw even with its partner firm revenues 

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Taking over an adviser's book can be risky venture

Stepping into the shoes of a retiring financial adviser may sound easy compared to the business development efforts it takes to recruit an entire practice of clients. But even after making it through the difficult task of completing such a deal, many challenges lie ahead.

Advisers may face hurdles establishing trust with clients or just navigating a mixed bag of client personalities and their multiple ordeals, experts said. And depending on the extent of the takeover, advisers may find themselves dealing with new employees and potentially incompatible technology.

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6 steps to becoming a billion-dollar RIA firm

While billion-dollar firms might be considered a minority in the wealth management industry, more and more firms are reaching this level. In 2012, there were more than 500 billion-dollar firms reported – up from 300 firms just three years prior.

And these firms are controlling a disproportionate amount of the assets in the RIA channel, according to the Alliance for Registered Investment Advisors.

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Reach and Surpass $1 Billion in Assets Under Management

The Alliance for RIAs (aRIA) announced the release of its fifth whitepaper, titled "6x6 = $1 Billion: Six RIAs Share Six Secrets to Achieve Scale". The paper taps the real-world experience of each of the six aRIA members, among the top independent RIAs in the United States, in outlining how they "broke through" the growth plateau, reached and then exceeded the billion-dollar mile-stone.

The whitepaper will be available for free via the aRIA website in addition to previous thought leadership pieces published by the group, all designed to help fuel the growth of the independent financial advisory movement.

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Billion-dollar RIAs' lessons for advisers

54% of financial assets are held at firms that have amassed at least $1 billion from clients, up from 42% only six years ago, according to Cerulli Associates. Advisers striving to be among this group of successful firms can learn from these billion-dollar behemoths, and the Alliance for Registered Investment Advisors (aRIA) explains how.

Based on aRIA’s presentation at the 2014 Schwab Impact conference in Denver, and a concurrently released a whitepaper, here are 5 ways independent advisers can emulate the industry’s leaders.

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Six Secrets to Building a Billion Dollar Firm

The evolution of an owner is critical in order to become a billion-dollar firm. Most owners start as an advisor and then gradually move into a management role. From there, owners should start to transition out of everyday client responsibilities and take charge of the strategic vision for the firm. Moving away from the advisory functions can be difficult for many owners.

But in order to handle the complexities of a large firm and to retain talent, firms need to function like formal companies, complete with a corporate governance structure.

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A Peek Inside Elite Advisor Think Tanks

“Few RIA bosses have the bandwidth — or the clout — to participate in think tanks that seek to push the industry forward by trying new things. Brent Brodeski, CEO of Savant Capital Management, belongs to two.

One is Zero Alpha Group, or ZAG, which has eight member firms that together manage more than $14 billion. They share an investment and fiduciary philosophy; and their collective goal is to improve their marketing, compliance, technology and client service.”

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RIA alliances help independent advisers prosper

The RIA business was a lonely place when Brent Brodeski joined Savant Capital Management in 1992. He and founder Thomas Muldowney had no forum for talking with other registered investment advisers about how best to manage customer relationships or the back office, what to pay staff and other mysteries of running an advisory practice.

After three years, Mr. Brodeski set out to address this glaring lack of support. He helped launch Zero Alpha Group, an alliance of independent advisers who share business knowledge and best practices.

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Connect with clients by being real

For many advisory firms, summer is a fantastic time to work on business strategy. Client engagement tends to slow, which provides opportunity to work “on the business” not “in the business. Last month, I witnessed some very powerful displays of independent advisory firm owners connecting with employees and clients.

What struck a chord was how the advisory firm communicated with its audience and the profound effect it had on the people involved. One of the most enjoyable aspects of working with independent financial advisers is helping top advisory firms deal with long-term opportunities and challenges.

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TD Ameritrade swims upmarket

“United Capital's chief executive, Joe Duran, admits that three years ago, he would not have considered putting any of his millionaire clients' money with TD Ameritrade Institutional.

But his firm, which has around $10 billion in assets under management, is now in the midst of transferring some of its largest accounts, each worth about $10 million in assets, to the custodian, which Mr. Duran said has become a clear competitor in the ultrahigh-net-worth space.”

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Mellon Wealth Management Pursues Bold Millennial Strategy

What can the retired godfather of the Smith Barney wrap program bring to an unlikely formation of an RIA under an old municipal bond brand? In a word: Courage.

What else could explain how Frank Campanale was able to recruit a second high-profile Wall Street wealth management team in the face of obstacles that go way beyond the usual perils implicit in these circumstances.

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Time to take a fresh look at how much you charge clients

“Should there be a pricing paradigm change in private wealth management? The model for delivering advice in the private wealth space has seen tremendous change this century. The expansion in the independent channels has been quite acute, with asset growth, technology advances and the advent of delivering tailored client experiences being some of the most meaningful changes.

Despite the different ways advice is being delivered, few firms have taken a fresh look at how they charge for it. Since I starting working in the private wealth space, the pricing model for registered investment advisers has — shockingly — seen virtually no change.

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Calm before the RIA storm

“Many fee-only registered investment advisory firms are sitting pretty after strong growth in 2013, when rising markets perked performance across the board. But don't get too comfortable, industry experts warn.

“One of the dangers of a year like last year is that it can cause you to be a little complacent,” said Scott Hanson, a founding principal of the Hanson McClain Group, an RIA with about $2 billion in assets. “This may be the quiet before a storm.”

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How Hard Is It to Pick the Right Custodian?

"Again and again, advisors have commented to FA-IQ that, as far as they and their clients are concerned, the major custodians don’t differ much in their core services.

At the end of the day, they say, all offer fairly standardized processes for opening accounts, safekeeping securities, clearing transactions and conducting wire transfers. Yet, in a recent FA-IQpoll, 62% of readers indicated the choice of custodian matters a lot."

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Asset Growth is a Good Sign for RIAs

"A year ago in our prior RIA survey cover story, we spoke about the profession possibly entering a golden age where numerous stars were aligned in its favor,

including the ascendency of the fee-based model, the increasing attractiveness of going independent and the greater awareness of fiduciary responsibility among the investing public."

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