Ten and growing, but not too quickly. That’s the number of franchisees that SEI Investments Inc. has achieved in 2005 in its Wealth Network, part of an ambitious approach to provide holistic advisory services to high-net-worth baby boomers through a network of franchised firms across the country. The 10 firms are grouped into three segments: two are company owned startups; two are what SEI’s Michael Farrell calls “franchises inside”–specifically, within a CPA firm and a bank; and the remainder are existing independent firms converting to franchisees. When last we checked in with SEI on this initiative, it announced last summer the first franchisees as part of a plan to build a network of some 200 firms by the time the first boomers reached traditional retirement age.
The network is close to the heart of SEI cofounder and current chairman and CEO Al West, who believes that there is now an unmet need that will only grow among those HNW boomers for a range of “life wealth” services as they approach retirement. Multiple conversations with employees throughout SEI make it clear that the Network is not some peripheral initiative, but is a key strategy for the future of the entire company. The Investment Advisor unit at SEI is also a growing part of its business. (In an unrelated development, in early January SEI announced that the head of the Advisor unit, Carl Guarino, would be leaving the company, replaced by longtime SEI executive Wayne Withrow.)
Who’s the proper candidate for a franchisee in the SEI Wealth Network? Simply put, says Farrell, franchise solution leader for the SEI Advisor Network, it’s “someone who’s been operating in an advisor practice, and they see an opportunity to convert it to a business.” The conversion takes place through adoption of “systemization, and process, and an organizational model that is not typical in an advisory practice,” he says. The right firm, Farrell notes, needs to “strategically line up with us in delivering a service offering against an unmet consumer need from high-net-worth boomers, and philosophically in that they want to introduce more system, more process, so the practice operates more like a business.” The firm can be a single practitioner or multipractitioner–both types of firms are among the first 10 franchisees. In exchange for revenue sharing with SEI, the franchisee receives a practice management best practices system, access to marketing and compliance assistance, and a referral system. The client is charged a retainer for the advice he gives the client, and there is a separate implementation fee for any investment work or insurance purchases. The amount of revenue sharing varies by franchisee and won’t be divulged by the company or the franchisee.
One of the first 10 is Scott Mason, a former self-described “Joe retail stockbroker” who helped found fee-only investment advisory firm Rubicon Wealth Management in Bala Cynwyd, Pennsylvania, in 1995. He had been working with SEI for years. using its asset management offering, but when Rubicon received some practice management consulting through SEI from Moss Adams several years ago, Mason realized that the firm was at a crossroads and needed to become better structured if it wanted to continue to grow. Rubicon became one of the first two franchisees in November 2004, and Mason says that the “changes that have occurred have been great.” Existing clients feel the benefit, he says, because they see “immediately a consistency of process, and how they are handled.” The firm has signed up clients “that we wouldn’t have gotten” without the Network’s lead generation system. Mason can offer more services without adding resources, he points out.
SEI has reached its goal of 10 firms so far, and in 2006 and ’07, Farrell says the Network’s focus will be on “selective growth” across the three segments, and in continuing to help its current franchisees grow.