Can Only the Biggest Firms Serve the Biggest Clients?
Operating under a belief that bigger is better, advisors find themselves “stuck” in more than just ideology
“The bureaucracy and hyper-vigilant compliance culture are killing me—but I feel stuck. That is, there is no better option.”
That was what “Sandy”, a Barron’s top advisor, told me just the other day. If I had a nickel for every advisor that has shared this same sentiment with me, I’d be writing this from Tahiti instead of New Jersey.
It might surprise you to hear that it is often the most productive and successful wirehouse advisors – usually those who service the highest net worth clients – who feel the most “stuck”. It is their belief that the wealthier and more discerning the client base, the more wed those clients are to the big name firms; that is, the wirehouses. After all, these same firms created a culture where advisors are indoctrinated in the belief that they are only successful because of the firm name and the brand cache that comes with it.
Why do these advisors feel stuck, as Sandy described it? Because Sandy, and others like her, know that they could get paid a handsome transition package to change jerseys, but think that all major firms are created virtually equal when it comes to bureaucracy. If that’s the case, then switching firms wouldn’t move the needle in a meaningful way with respect to how they can service clients and grow their business. And where else could they go if their clients only trust the big brand names?
Honestly, I completely understand why Sandy is feeling stuck, but I also know that her feelings are based upon an outdated misconception.
Is that all there is?
It seems sad to me that people who have worked their entire professional lives to build spectacular businesses, always putting the best interests of clients first, now find themselves in a place where they feel there is no better option. And, with the word “fiduciary” top of everyone’s minds, it seems especially disingenuous that these advisors stay put NOT because they believe that their firm is the best place to serve those clients, but because they are scared off by the belief that the clients have it right—that the only way to service a high net worth client is at a big firm.
What if the advisors and their clients aren’t necessarily right? What if they are simply naïve to how the industry has evolved and what new possibilities exist?
Let’s look at it this way:
- Product and platform are commodities; anything that an advisor needs to access to meet the needs of clients – of any size and type – can be obtained no matter where the advisor practices. The true definition of open architecture means the big firms no longer have the market cornered when it comes to customized, best-in-class solutions.
- Technology is certainly good at the big firms, but definitely not the best out there. There have been advances by third-party providers from Silicon Valley that would take years for a larger firm to even consider, let alone develop on their own.
- Whether it be regional firms like Raymond James, boutique shops like First Republic Private Wealth Management, William Blair, or any one of the plethora of models in between that grant advisors their independence, advisors who service high net worth clients are changing their minds and being blown away by the capabilities that exist outside the wirehouse world.
The feeling of being stuck often takes hold when you are held hostage by a lack of knowledge; that is, living under the guise of old beliefs. The reality is that things change. By expanding your knowledge and understanding, you challenge and release the “old thoughts” and see the world for what it really is at this point in time, not what it was once believed to be.
So if you’re feeling stuck, the best antidote is to get educated about how the landscape has evolved and see what it looks like elsewhere. The result of this exercise is to ensure that your thinking isn’t myopic and, likely, the net result will be one of two things: Either you will find a better option that allows you to better service your clients, or you wind up staying where you are, but from a renewed and revitalized position of greater knowledge and strength. That is, you’ll feel better about where you are because you did your due diligence and can say with confidence that where you are is indeed the very best place for your clients.