New and Improved
Recent news about the “spin off” from AMG of Wealth Partners Capital Group, made me proud to be an American! The resiliency of capitalism’s desire to improve was front
and center. AMG is not the only wealth
advisory firm that has embraced a new and improved approach. Silicon Valley
does this constantly and terms it a pivot. When firms realize that their products or services are not
attracting new clients or are not generating enough profit to satisfy investors
they pivot. What are the components of a pivot or a new and improved product or
service? Let’s take a look.
What’s Working?
An effective pivot does NOT blow-up all items of the
original business. The firm must
identify what is working and stick with that at a minimum. In wealth management what is working is
independent and unconflicted advice.
What Isn’t Working?
We can move now to what isn’t working. In the case of AMG what wasn’t working
was the target market of firms with greater than $4 billion in AUA was not
large enough to support their initial projections. The largest target market of independent firms is aging and
using antiquated technology.
This should create ample opportunities for acquisitions for the new and improved firm.
How
can we improve?
AMG is not alone.
Other firms are experiencing challenges and are making
changes. HighTower has evolved
since its founding to establish numerous new service models. If it works with toothpaste let’s see
how it works for HighTower and other independent firms. Dynasty has added new services to
their original offering like a TAMP and purchasing an RIA's cash flow to aid with advisor
transition. United Capital has borrowed a page from
large RIA’s that came before them by offering some of their in-house software
to outside firms. The new plans of
each firm can be validated by the market research of DeVoe and Company. The final area that needs to be
improved and has reared its ugly head with most of the incumbent firms is
Private Equity. Since the initial business
projections of most firms have not been met the pressure from
Private Equity has forced their hand to pivot. Firms that were bootstrapped or funded by bank
debt are in better shape here.
I’m sure there will be a many new and improved services for
independent wealth advisors but until then Wealth Partners Capital Group is
the best solution we’ve seen. I
also LOVE my new and improved Crest.
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