aRIA (The Alliance for RIAs) Releases Second Whitepaper for Advisors; Challenges Independent Advisors on Business Management

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Too few advisors have a coherent business plan and many choose to ignore key structural issues. Independents are guilty of some of the same questionable practices of which they accuse wirehouse reps. Advisors who believe they are well-positioned to sell their businesses at the end of their careers for a decent price are, for the most part, mistaken. The objective is to help avoid “catastrophic outcome” for advisors ignoring warning signs

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We always get asked how we built successful businesses and what we’re planning for the future – and these whitepapers provide a window into our thinking.

The Alliance for RIAs (aRIA) today released the second of a four-part whitepaper series for advisors called Creating Value and Certainty Within Your Independent Advisory Firm. The series of papers is based on the combined experience and observations of aRIA members who collectively manage over $20 billion of client assets.

aRIA (ah-ree-uh) group members include Brent Brodeski, CEO of Savant Capital; John Burns, Principal at Exencial Wealth Management; Ron Carson, CEO of Carson Wealth Management Group; Jeff Concepcion, CEO of Stratos Wealth Planning; Matt Cooper, President of Beacon Pointe Wealth Advisors; and Neal Simon, CEO of Highline Wealth Management. Each has proven his ability to build and grow highly successful advisory firms by industry standards.

Part Two of the whitepaper series, Taking Control of Your Future: Scale, Value and Certainty, delves more deeply into specific problems independent advisors are facing, which they seemingly choose to ignore. Among other things, the paper likens the complacency on the part of independent advisors to some of the “worst-practices” deployed by wirehouse reps, a segment which independents tend to criticize.    

aRIA identifies “embedded systemic business risks” that hinders growth, slows revenue and profitability, degrades value and could provide a devastating impact on the advisor’s plans to ultimately sell at a time or price of their choosing. The paper theorizes not only that the “pain threshold” of independents is too high, but perhaps more dangerous is their complacency and the lack of any real catalyst for change. aRIA labels this type of wheel spinning the “Annuity Trap” – operating your small business like an annuity, or an annual ATM machine.

The first installment of the whitepaper series reviewed the blossoming of the independent advisory space and addressed some broad challenges advisors face. This installment delves deeply into the specific issues of: a) enhancement; b) sustainability; and c) certainty. The group identified these three components as vital for advisors to proactively address, and then provides specific actions advisors can take to do so.

“The aRIA group members have a passion for helping advisors – just look at their track records and how they are doing it individually” says John Furey, principal at Advisor Growth Strategies, LLC and Managing Member of aRIA. “But to address the larger challenges our industry faces, which are daunting, we collectively feel we can make a difference through education and tackling key structural issues head on.”

“Let’s have a frank conversation” says Brent Brodeski, CEO of Savant Capital. “We always get asked how we built successful businesses and what we’re planning for the future – and these whitepapers provide a window into our thinking.”

This installment may seem very direct initially, but not only does aRIA have the evidence to back up its assertions, it also provides solutions. Among them a checklist for advisors who acknowledge it is time to tackle the issues (partial list below):

1.    To achieve scale, would I be better off building as a standalone entity (status quo) or evaluating strategic opportunities with other entities (outsource, strategic alliance, combination, being acquired)?
2.    What is my time horizon to exit the business? What certainty do I need to create now for my firm and my clients?
3.    Has my firm hit a plateau in terms of growth? What new capabilities, people, evolution of value proposition and infrastructure are required to accelerate the next phase of growth?
4.    If I maintain the status quo and not position my firm to invest the time, energy and money required for growth, am I prepared to concede eventual erosion in my enterprise value?

The papers contain case studies and real stories from the aRIA members, who asked and answered these questions themselves, resulting in positive actions that took each of their firms to the next level.

Carson Wealth’s Ron Carson is candid about such an assessment: “About 15 years ago, I took a look in the mirror and asked myself if my practice was the one I wanted looking after my family if I were to die unexpectedly – my answer was no. And this drove me to begin a thorough examination of my business, including the questions in the paper that we are asking advisors to ask themselves.”

Download the full, free copy of this whitepaper at: allianceforrias.com

Parts 3 and 4 will appear beginning in Q1 of 2013:

  •     Part III: Myth vs. reality: What is your independent advisory firm really worth?
  •     Part IV: Navigating your path forward and achieving your ideal model

All of aRIA’s thought leadership is available via the group’s website: http://www.allianceforrias.com.

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About Advisor Growth Strategies

Advisor Growth Strategies, LLC (AGS) is a leading consulting firm serving the wealth management industry. AGS provides customized business management solutions for independent firms seeking to aggressively grow their business and for financial advisors in transition. Our services include strategic planning, recruiting and acquisition programming, compensation design, and succession planning. We serve established independent advisors, large breakaway advisor teams, and institutional level corporations. On the web at: http://www.advisorgrowthllc.com

About aRIA

aRIA Group, the alliance for RIAs, is a “think-tank” study group comprised of six elite RIA firms that collectively manage more than $20 billion in client assets. The group, managed by John Furey of Advisor Growth Strategies, offers insight for advisors considering ways to enhance their firms’ enterprise value. Members include Brent Brodeski, CEO of Savant Capital; John Burns, Principal at Burns Advisory Group; Ron Carson, CEO of Carson Wealth Management Group; Jeff Concepcion, CEO of Stratos Wealth Planning; Matt Cooper, President of Beacon Pointe Wealth Advisors; and Neal Simon, CEO of Highline Wealth Management. The group meets regularly, releasing thought leadership pieces of interest to both independent and wire-house advisors interested in exploring long-term growth strategies. On the web at: http://www.allianceforrias.com

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Press Contacts:
FiComm

Jason Lahita
973-460-7837
jason.lahita(at)ficommpartners(dot)com

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