“I’d known Jim Guy since he became affiliated with us as a rep,” Cambridge Investment Research Chairman and CEO Eric Schwartz began, when reflecting on how the recently deceased Cambridge executive came to work at the firm. “We decided one day that we needed a dedicated marketing team. That was on a Friday; on the following Monday, Jim called and said he’d like to throw his hat in the ring.”
During a wide-ranging discussion at its Premier Club Conference in Colorado in mid-May about the loss and how the firm is handling it, as well as new and ongoing initiatives, Schwartz added that although Guy had been in Baltimore for 50 years, he and his wife packed up and moved to the very different Fairfield, Iowa, because “he wanted to make more of a difference and have a broader influence.”
Guy continued to manage his own practice even after the move, and was for a time the largest producer for the firm. Schwartz noted that Guy had begun transitioning out, at least technically, but continued to work a full schedule prior to his death on April 5. The topic naturally gave rise to succession planning and next-gen issues, and specifically Cambridge’s New Century Council, a group of advisors in their mid-40s and younger.
“One member of the council never meets face to face with 90% of his clients,” Cambridge President Amy Webber said. “Many of them are clients and prefer to do it remotely because of their busy schedules.”
“If you look at it 30 years from now, this is how it will be done,” Schwartz added. “The top seven or eight firms will have pretty strong technology, all with a different focus. If you look at ours, it’s open architecture. For Commonwealth Financial Network and LPL Financial, it’s more plug into their box.”
Technology is just one aspect of the independent broker-dealer business that will make it tougher for smaller firms to compete going forward, he argued.
“They don’t have the money to do what’s necessary; it’s tough to regularly get beat. If they still do $1 million of $50 million in revenue, they can sell it for $20 million. But if they wait it could all blow up and they’ll have nothing.”
The conversation then turned to the issues surrounding a fiduciary standard, with Webber noting “our advisors probably wouldn’t use the word fiduciary, but they act in that manner already.”
Schwartz added the firm has been offering a fee model for “a long time,” but adds the firm has one advisor that adamantly refuses to institute it because she feels it’s too expensive for her clients.
“She lives off the trails and could triple her income, but she doesn’t want to do it. It’s an example of how fees and fiduciary isn’t necessarily the same thing. A fee advisor could easily play the ethical card, but they didn’t suddenly become ethical just because they went to fees. May times it’s simply to double their income or because they’ve been kicked out of FINRA.”
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