What's Next?

The financial services industry is going through a significant transition.  This is especially noticeable in the wealth management segment, which is feeling the triple impact of breakaway advisors, management restructuring and the DOL.  The needed changes will affect clients, advisors and management professionals.  Hopefully it can be an improvement for them all.  It has taken me over six months since my January blog to realize that embracing these changes could be beneficial for us all.  We all should be asking ourselves “What’s Next?”


The robo advisors and ETFs have staked their claim that active money managers and human advisors are flawed and best managed by computer algorithms.  Human advisors and managers need to kick the computer’s butt (assuming they have a butt).  As professional management transitions from conflicted business models that need managers to drive sales goals of proprietary products managers must retool and understand how to help independent advisors.  To date many independent firms have created their own products and managers need to advise against making the same mistakes of our old firms.  We can do better than pass-trough vehicles, institutional consultants, TAMPS and exclusively hiring professionals from our old firm. 


While advisors have made the important decision to break away they still need to make a few more decisions.  First they must decide on what they want to build.  A business that will create significant franchise value or one that keeps doing what they have always done without the burden and financial tax of their previous firm.  I don’t believe there is one right answer.  Each decision will require different staffing and have different profit margins.  They will also have significantly different terminal values.  To eliminate any confusion the press assumes we all want to breakaway and build a business.  Fake News?

So What’s Next?

A new and improved business model that is a dramatic improvement on the current providers.  We have numerous free tools at our disposal to help us build a better mousetrap and create an enduring culture.  Podcasts and MOOCs are a good place to start.  Clients have initially voted with their assets that the unconflicted Fiduciary model is preferable.  We are at square one and need to continue to improve.  The good news is no independent firm has figured this out yet…


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