Many advisors cite “improving client service” as the catalyst for a move—but knowing what the real impact will be is critical.
What motivates top advisors who are knocking the cover off the ball to risk disrupting momentum by making a move? No doubt, every advisor wants to improve their ability to grow the business. But ultimately, most will share that the quest to deliver more – and better – service for clients drove them to make the leap.
Sometimes the catalyst is a “push”—that is, feeling limited by the firm’s platform or pressured to “sell” standardized solutions that may not be optimal. For others, it’s a “pull” or desire to do more for clients by becoming a true fiduciary—and enhancing service, support, technology, and communications in the process.
So, for advisors who want to ensure that a move passes the test in terms of delivering “more for their clients,” it’s paramount to ask a simple question:
“What’s in it for my clients?”
It’s the most important question advisors need to ask before making a move—because it’s the first question they’ll need to answer when announcing the change.
So, it’s critical that the due diligence process provides the answer with clear and meaningful client benefits identified along the way.
To accomplish this, our advice is to assess the new firm or model against these 7 criteria:
1. More support.
Clients want an advisor who is responsive and offers a personalized approach that focuses not only on investments but their entire financial life. To deliver that level of service, advisors need sufficient support staff.
At the wirehouses, the production level an advisor must hit to merit a fully paid support person keeps increasing, putting advisors who want to offer more personalized client service but don’t have the bandwidth in a difficult situation. In contrast, regional firms typically provide more paid support staff. While in the independent space, advisors have full control over expenses and can hire an optimal team to support clients.
Bottom line: A move that allows an advisor to optimize support resources can help expand the scope of service—a clear benefit to clients.
2. More investment flexibility.
Truly open architecture with the ability to “shop the Street” for best-in-class investments is a hallmark of the RIA space and an advantage for clients—since greater investment flexibility translates into more personalization of client portfolios.
But is there an advantage when advisors transition from one W-2 firm to another? Absolutely—like a broader SMA platform or more sophisticated alternatives and structured products. And in the case of some high-end boutiques, there’s access to unique private deals and alternatives that are typically not available at the larger firms.
So ultimately, a landing spot that provides greater investment flexibility frees the advisor to deliver a more customized investment approach to better meet clients’ needs and goals.
3. More services.
Today clients are looking for a “financial quarterback” that can advise on all aspects of their wealth. So, the ability to provide a truly holistic offering all-under-one-roof – including not only investments but tax planning, family office services, trusts, and the ability to advise on assets held away – is seen by clients as a real benefit. It is also one of the major advantages of the RIA space since these firms are free to offer a comprehensive suite of services catered specifically to their clients’ needs.
Is this possible in a W-2 environment? Yes, the private wealth groups within the major wirehouses offer advisors access to teams of specialists and an expanded suite of high-end resources catered toward their ultra-high net worth clients.
Boutiques also provide a more holistic offering since the platform and resources at these firms are curated to serve the needs of a select group of high-net-worth clients and the advisors that work with them. Along with a compliance environment that provides greater latitude (possible because they are managing a small group of experienced, high performing advisors) this translates into an environment that allows for both a broader service offering and greater customization.
A move that allows advisors to expand services is a significant value-add in today’s environment—where clients are looking for their advisors to do more than just offer investment advice.
4. Lower costs.
This one is very clear: The ability to lower costs is always a win for clients!
For advisors moving within the traditional employee space, lowering costs might be achieved by finding a firm that eliminates minimum pricing on small accounts, offers more competitive pricing on SMAs, or better lending rates and terms. In contrast, a move to the RIA space gives advisors complete control over expenses and the ability to shop the Street for the best pricing on everything.
This can translate into substantial cost savings, which can be passed along to clients.
5. Better technology.
As technology advances, clients are demanding an intuitive and comprehensive tech experience: For example, a client portal with a user-friendly interface that is accessible via any device and features up-to-the-minute information.
Some regional and wirehouse firms have prioritized technology investments and, as a result, offer advisors a modern, fully-integrated technology suite. Unfortunately, others are well behind the curve, underinvested, and wedded to cumbersome legacy systems that are just not keeping pace. This leaves advisors and clients making do with systems that are at best inefficient and at worst lacking in capabilities.
The approach in the independent space is very different. RIAs have access to state-of-the-art technology available from third-party vendors and can create a tech stack that is truly customized to their specific needs.
More sophisticated planning tools, an intuitive client interface, and reporting that provides a comprehensive overview of a client’s full financial life are some of the clear client advantages that better technology can deliver—and will ultimately answer a client’s needs.
6. Less Bureaucracy.
How does this benefit the end-client? It’s simple: If an advisor can decrease the number of hours spent on administrative tasks and get things done faster without numerous layers of management approvals, they can be more responsive to their clients’ needs.
Big firms tend to have a great deal of bureaucracy and cumbersome compliance requirements—a by-product of managing a huge advisor force. Smaller firms, specifically boutiques, some regionals, and independents, are more flexible, with fewer layers of management to wade through and compliance that is less onerous.
Advisors that transition to a firm with less bureaucracy gain back more of their time—which they can then use to focus on enhancing service and being more proactive and available to their clients.
7. Better communication.
The ability for advisors to communicate quickly and efficiently, both on an individual level or en masse, has become more important as clients have come to expect real-time information and responses.
Unfortunately, to get approval on something as simple as an email update on a rapidly changing market, some advisors must go through a process so cumbersome that by the time the email is approved the content is obsolete. Other advisors may be limited to distributing only “canned” firm-approved materials, sans any customized commentary.
A move that allows advisors to freely communicate views and differentiate their approach makes them – and their information – more accessible to clients. A clear win-win!
At the end of the day, a successful move is grounded in finding a better home not only for the business and the advisor but also for clients. So, keeping the idea of “what’s in it for my clients” top-of-mind when performing due diligence will ensure that you really understand how a new firm could move the needle for all.
And, when you pick up the phone to announce the transition to clients, you will be well-positioned to help them see that the short-term disruption of the move will pay off with long-term benefits.
As seen on FinancialPlanning.com…