5 steps to elevate the next generation

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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Defining Internal Succession and the Next Generation Owner

News flash ... the advisor population is aging. Anyone in this industry knows this. Industry advocates have consistently called for better succession planning, that which promotes the long-term sustainability of RIA firms. This call must be heeded, and yet time and again, advisory firms are forced to turn to outside buyers or merger partners as a succession solution. And for some, perhaps the right choice is to find a buyer or a larger firm within which they can execute a smooth transition.  But a firm’s options should not exclude one that many advisors prefer – one which requires meticulous planning and execution: the internal succession. 

Planning for the next generation of owners is required for firms that want to remain independent or want increased succession options in the future. However, a lack of execution may result in a lack of confidence with the next generation of professionals within a firm.

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How Building a Succession Plan Can Increase Your Firm’s Value

Industry participants have articulated the risks of not having a succession plan for years – lack of continuity for clients, inability for advisors to realize the value of their life’s work, and risk for employees in terms of their long term employment. Surveys tell us that not enough advisors have developed a real succession plan, with most surveys triangulating about two-thirds of advisors without one. Although it is widely accepted that succession planning improves business continuity and protects owner equity, a comprehensive succession plan brings additional benefits. But to develop a truly comprehensive succession plan that maximizes value, advisors need to shift their thinking about what a succession plan really is. Read More

How to Prep a Financial-Advice Business for Sale

As more baby boomer financial advisers contemplate the sale of their practices, there are steps they can take to potentially increase the businesses' value and command a higher price.

Some value-boosting techniques, such as changing their compensation system, may take longer than say, cutting costs. So advisers should ideally focus on making selected changes a few years before they actually expect to sell. Read More

5 Mistakes to Avoid When Selling a Financial-Advisory Practice

Even advisers with decades of experience buying and selling investments for clients may have no experience selling a financial advisory practice.

That can be an issue for these veteran advisers when they are ready to sell a business they built or perhaps transition to retirement by combining it with another firm. Some make rookie mistakes during negotiations which can cost them hundreds of thousands of dollars—or even a deal. Read More


Parlaying Cloak-and-Dagger Skills into 'Pure Financial Independence'

In 2008, David Hou and Mark Sear famously synchronized their watches to pull off their precise breakaway from Merrill Lynch Private Investment Group in Los Angeles to create Luminous Capital. See: Merrill Lynch stars take a leap of faith to a new office — and independence.

But all good jailbreaks need a getaway driver. In the case of Luminous, Hou and Sear tapped Matt Sonnen. He’d left Merrill Lynch in 2005 to try his hand at selling insurance. Turned out insurance wasn’t for him, so Sonnen was receptive when Hou asked if he could oversee the formation of the new firm outside the confines of Merrill Lynch. See: Hou-Sear team can’t always beat RIAs so it joins them.

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The cost of independence

Christopher Bray founded Ariel Capital Advisors nearly two years ago, naming the Florida-based advisory firm after his 4-year-old daughter. Now he is being sued by Ariel Investments, a $10 billion Chicago-based mutual fund company, for allegedly infringing on its trademark.

Mr. Bray, whose firm has about $225 million in assets under management, doesn't want to change his company's name and is fighting the fund company in court. But that is coming at a cost, both in legal expenses and time that could be better spent growing his young business.

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Walt Bettinger Unbites His Lip and Ignites an IMPACT

For four merry days in November, no robo-advisor disrupted the CEO of The Charles Schwab Corp.

Walt Bettinger commanded the stage at Schwab IMPACT’s opening session last week, declaring to a largely adoring crowd that reports of his company’s demise as an innovator at the hands of a pitchfork-wielding competitors or ever-wily wirehouses were off base.

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10 Ways RIAs Can Recruit and Retain Top Talent

Many owners of RIAs are nearing retirement, and they have not done enough to plan for the future of their businesses, the Alliance for Registered Investment Advisors reported in a new white paper released this week.

According to aRIA, most founding partners are more interested in operating their practice than in building a business, leading to several potentially deleterious outcomes.

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Lack of Succession Plan Hurts RIAs Long-Term

RIAs are too focused on operating a practice rather than building a sustainable business, according to a white paper from the Alliance for Registered Investment Advisors released at the Schwab IMPACT Conference in Boston on Wednesday.

John Furey, the paper's author and a founding member of aRIA, said not having a succession plan can damage the firm by causing employees to leave and preventing them from attracting next-gen talent.

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aRIA Releases Whitepaper to Propel RIA Growth

The Alliance for Registered Investment Advisors (aRIA), has released a white paper entitled "Elevating the Next Generation of Your Business", identifying the ways in which RIAs fail to address the long-term future of their firms, and the top 10 tips and tricks they can use to correct course.

The whitepaper points out that owners of RIAs, many of whom are nearing retirement, haven't done enough to plan for the future of their businesses. aRIA says that this failure is because many founding partners are less interested in building a business and more interested in being operators of their practices.

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Another $1B team to flee Stifel-owned Barclays for RIA

How profoundly has the RIA landscape changed since the ’08 crash? So drastically that a UHNW team leaping to independence from a mammoth financial services company to a just-created RIA looks like the conservative, not the radical, move.

Summit Trail Advisors recently welcomed a $1 billion team from Barclays — the latest major defections from the New York-based firm since it announced massive job cuts in 2014 leading up to its sale in June to St. Louis-based Stifel Financial Corp. See: How exactly five ex-Barclays advisors and one analyst across three time zones combined to make a $3 billion RIA.

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Credit Suisse punts its private banking business to Wells Fargo

Henny “take my wife … please” Youngman would be proud of the deal Credit Suisse just made to offload what is left of its U.S. private bank on Wells Fargo.

Under the arrangement disclosed today, Credit Suisse Group AG gives Wells Fargo the exclusive right to rampage its cadre of wealth managers with the idea of situating willing Credit Suisse brokers by 2016.

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$7-billion deal for myCIO delivers 12-billionth dollar of acquired assets for AMG

The deal, announced July 13, underscores that AMG has established itself as an alpha predator for the top half of the top 1% of RIA firms in the United States, according to John Furey, principal of Advisor Growth Strategies, LLC of Phoenix.

“AMG is seeking to partner with the very best in the industry. I would imagine their addressable market is less than 100 RIAs nationally. So clearly they are trying to build some cachet with RIA owners.”

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No Slowing RIA Growth

In the financial advisory industry there are potential regulatory burdens, fickle investors, and crafty competitors—but nothing has changed the relentless march of the registered investment advisor space since the 2008 crash.

“The sellers are definitely a bit more serious. I think there are more willing sellers because valuations are up,” says John Furey, principal and founder of Advisor Growth Strategies, a consultancy in Phoenix. “It’s been an ongoing secular trend for independent fee-based advice. I think it’s real. The market’s up and the pie is growing.”

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Billion-Dollar RIA Boosts Focus Financial's Footprint

"Expect more announcements in the future from Focus and others," Furey says, citing strong advisory firm growth and breakaway transitions.

"The market for deals may be on a nice ascent, [which] makes sense given the market demographics. The Focus deals are a testimony to Focus' ability to provide capital," Furey says, and the fact that "their affiliate firms are getting better at acquisitions."

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Savant Makes Orion Capital Its Third RIA Acquisition

Savant Capital Management has closed on its third acquisition of a fellow RIA firm over the past 17 months with the purchase of Orion Capital Management of Winnetka, Illinois.

With the April 30 addition of Orion Capital’s $150 million in client assets, Rockford, Illinois-based Savant’s total AUM has risen to nearly $4.5 billion. As for future acquisition plans, Brent Brodeski, Savant’s CEO, said “we’ve got another one in the works,” and as for Orion, the plan is to “grow it to $500 million over the next three to five years.”

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The 'why', 'why not', and 'how' of adviser succession planning

As I watched episode 3, I found myself pacing, and mixing in the occasional fist pump. I can't contain my enthusiasm when it comes to this topic, or this series. In this episode, we are treated to the consultants giving their analysis.

Greg Opitz, longtime advisor coach at Peak Advisor Alliance, and John Furey, principal at Advisor Growth Strategies both sat down with our host, Matt Ackermann. Together, they broke down the situation at hand and discussed the topic of succession planning more broadly.

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