When news broke that Carson Wealth Management Group was launching an independent registered investment advisor and broker-dealer after 20 years under the LPL Financial umbrella, some observers may have been surprised. But, this is not new; “we’ve been working toward this for the last couple of years,” the firm’s Founder and CEO, Ron Carson, told AdvisorOne in an exclusive interview late Monday afternoon. With $3 billion in assets under advisement, the firm is big enough to draw attention.
“What we have is a really perfect storm in opportunity—in the unmet needs of the middle-class millionaire for proactive financial planning.” In the future, Carson (left) says, he believes “markets will be different; returns will be smaller, maybe with more “volatility.” There will be a “premium on planning. LPL shares my belief that the real future” for the industry lies in “comprehensive high-end planning—unlike what some advisors pass off as a comprehensive plan—and good service. We do an exceptional job in Omaha, and have clients in 38 states,” explains Carson.
In terms of growth, Carson says, “we will do an outright acquisition or lift out a book of business for advisors with $100 million in assets on up.” Carson is looking for three basic advisor situations:
“Advisors who don’t have a succession plan, who have built a good business but need a successor, and want to remain with the business for five to 10 years.” These are “small offices where advisors feel like they are out on an island—they just do investments or proposal planning but not comprehensive planning—and if they affiliate with us we do the comprehensive planning and compliance.”
Because Carson believes we’re in for another downturn in the next, maybe “18 to 28 months—the market’s gone nowhere for 10 years,” he’s looking for advisors who are “not good at investment planning,” who would just tell clients they were “not going to manage your assets anymore.” They would outsource that and do the comprehensive planning for clients. The comprehensive planning is a “real differentiator,” according to Carson
As far as recruiting goes, they are focusing their “efforts to getting the RIA and BD done, and looking toward 2012,” for recruiting, Carson asserts.
Carson was independently “affiliated with LPL since January 1989,” but without “our own BD;” they used LPL’s corporate RIA. The difference now that they will have their own BD and own RIA is that before, if FINRA wanted to examine Carson it went through LPL, now they’ll just “walk in our front door.” Carson’s outfit has had its own compliance person for some time, for both the RIA and BD. When the RIA launches on “June 30 or July 1,” that person will be strictly the RIA compliance person.
When they are ready to open the BD, in late third quarter or early fourth quarter they will “add a separate [compliance] person for that.”
The BD-RIA Dilemma of Two Hats: Fiduciary Versus Suitability?
Along with the “proactive level of planning, we believe in transparency and accountability and hold ourselves to a high standard. We only have the BD
as an accommodation for the block of annuity business that was done when the guarantees were good—too good to be true—and need a BD to service that.” These are, Carson says, “old VA blocks that were good for the consumer, aggressive with guaranteed benefits.” Other advisors who may in the future affiliate with Carson will need this service for their clients, Carson observes.
Regarding LPL, Carson says “LPL for years was ahead of everyone when it came to technology; clients loved it and it served their needs. But I don’t believe they are well ahead of the competition [anymore]. If they can't build it they should give us the ability to” partner with outside firms “or bring it in.”
“If it were just technology there’s plenty at LPL to be successful forever; we felt we needed better reporting, trading and billing capabilities. LPL is not the leader if you want to establish relationships with other custodians, and advisors have to have relationships with other custodians,” says Carson.
Carson adds that the list of custodians will likely “expand,” as they add more advisors with relationships with additional custodians. “The current plan is to direct assets to LPL if new advisors don’t have a custodian already,” but Carson expects to add other custodians as more advisors come aboard.
They’ve identified a custodial platform “provider” that they cannot yet disclose, but expect to have an announcement in about 30 days.
“We’ve had a great run with LPL and expect to be great partners into the future. They really get the advice market. LPL will be one of the great winners in the transfer of wealth,” Carson concludes.