Financial Services, Financial Advocates, and You in 2019

by | Feb 12, 2019 | HIDDEN

It’s a new year with endless possibilities and opportunities! We hope you too are feeling optimistic! As an advocate for independent financial advisors, we have been proactively planning for your success in 2019. While many firms hypothesize about what the future holds, we recognize that the changes are occurring now and not at some unknown, fixed point ahead. There are specific trends that will continue to grow in momentum this year, and we have taken the steps, starting many months ago, to help our advisors maximize these opportunities.

Here are a few important topics for advisors to focus on in 2019; along with what we have done, or have in the works this year, to help advisors adapt and grow more quickly than ever.

  1. Explosive AUM Growth Continues for Hybrid and Pure RIAs

Investment News released new data in November that revealed Pure RIAs are continuing to experience explosive growth of AUM, specifically in the Midwest (29.2%) and West (21.9%).  Their analysis focused on data provided in Form ADVs with the SEC and excluded asset management companies and firms affiliated with broker-dealers, so Pure RIAs only.

While Pure RIAs continue to increase AUM, Hybrid RIAs have outpaced Pure RIAs in advisor headcount by close to 3% as Independent Broker-Dealers and Wirehouses continue to experience declines.

Independent financial advice is not just the future; it is happening NOW.

Financial Advocates does not propose that one level of independence over another is best for your future. However, we do believe staying as a captive advisor may be detrimental to your future, as is, staying pigeonholed with a broker-dealer that doesn’t offer you the ability to continue to increase your independence, if and when you decide to do so.

We are “One Firm with Many Choices,” meaning we are positioned to serve advisors no matter where they are on the path to increased independence. Whether you want to transition to LPL Financial, America’s Largest Independent Broker-Dealer*, experience greater flexibility, and more options as a Hybrid RIA advisor, or achieve pure independence with a fee-based only practice, Financial Advocates has solutions for you.

A question to ask yourself, “How much success and independence can I achieve in the future where I am now?”

  1. Advisor Retirement is Driving Increased Transactions and a Push towards Greater Independence

The industry saw an uptick in full and partial retirement transactions in 2018. In part due to Succession Lending entering the scene in early 2018, new lending options have opened the door for more advisors to be able to pursue a merger or acquisition enabling more advisor retirements.

Advisors serious about buying a book of business can now secure a bank loan with a seven to 10-year term and a fixed or adjustable rate. With less paperwork and no requirement for a personal guarantee such as a lien on the buyer’s home, the entire loan can be 100% financed and closed within 30 days.

Last year, we increased our focus on advisors who are retiring and acquiring by providing matchmaking services, business valuation services, cash flow analysis, education with M & A Workshops.

As CEO of Financial Advocates, my focus will be in large part on assisting advisors with their M&A and succession planning. With 38% of advisors expected to retire within the next ten years, we have the expertise and services to help plan and make things happen smoothly.

  1. The Difference Between Buy vs. Build, Cookie Cutter and Custom Technology Solutions

They have finally figured it out. Why try and build it yourself, in-house, when the talent and expertise lie elsewhere. 2018 saw more large firms opt to buy vs. build. BlackRock partnered with Envestnet, Principal Financial acquired Robust Wealth, and LPL Financial purchased Advisory World. Will their technology offering improve? Yes. However, is the offering still going to be cookie cutter? Yes.

At Financial Advocates, we believe technology solutions selected for an advisor’s specific practice will provide the best value. We conduct ongoing research on technologies delivering the most value to advisors, who have both custodial and broker-dealer options, and for pure RIA advisors, who have no broker-dealer technology constraints.

At Financial Advocates, technology research is done for you, not by you.

  1. Investment Management is becoming a Commodity; Relationship Management Isn’t

It’s been happening for some time now. Investment management is becoming a commodity. Advisors who have already recognized this and have shifted their focus by outsourcing their investment management services are doubling their AUM, according to a recent report published by SEI and FP Transitions.

Financial Advocates’ Double Leaf Investment Management Services have proven to provide unique and useful alternatives for advisors. This year we are adding some new enhancements to the program, making it even more value-added and cost-effective.

First, we’ve SIGNIFICANTLY reduced the all-inclusive pricing. We’ve scaled and evaluated the internal costs to come up with a really attractive price. Look for an average of 15 BP, and more favorable cost for larger accounts, as well as a total AUM package. So significant savings for our existing users, and a great deal for new advisors.

Secondly, we can now help you manage your own models and offer Virtual Trading services. With it, we will advise you to help keep trading costs down, and if your AUM supports it, you could private brand strategies for your own models.

If the market has primarily driven your growth over the past several years, now is the time to refocus on new asset acquisition either through acquiring more assets from existing clients or new clients.

We can help you outsource investment management, simplifying your practice, and give you back more time to spend with your clients.

Increasing independence, advancing technology, outsourcing to increase value-add, and planning are our focuses for you in 2019! We propose they should be yours too!

We wish you much success in 2019 and beyond!

Gary Campbell, CEO Financial Advocates