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Advisor Summit Provides Management Instructions for Advisors

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Managing a firm as it grows–whether it’s still emerging or is already mature– can be challenge, as many of the speakers at the 2006 Investment Advisor Summit noted. The fifth annual conference, hosted by Investment Advisor and Moss Adams, was held November 30 and December 1 at the Mandalay Bay hotel in Las Vegas.

“The typical advisory practice is experiencing growing pains,” remarked Mark Tibergien, a principal at Moss Adams LLP, as he kicked off the two-day event as the keynote speaker. Tibergien, like the other speakers, focused on the issues of people in the business–firm founders, prospective employees, and those seeking to acquire an existing firm — and spotlighted the part each plays in the lifecycle of a successful practice. Tibergien made a point of cautioning advisors that live in the past, and highlighted the greater potential for success held by advisors that see the present as a catalyst for the future. Moreover, Tibergien warned that he profession faces a “talent shortage crisis” as the advisor population ages–62% of advisors, he pointed out, are over age 55. That crisis may extend to clients, too, since, he said, “clients tend to mirror the age of their advisors.”

A second major issue firms face is growth. As the financial advisory business matures, the age gap between principals and their employees is expanding, and advisors are finding it necessary to seek that new talent. Angela Herbers, a consultant for independent financial planning firms, focused her session on growing a business. Her first piece of advice: make sure you want to grow before you begin to expand. According to Herbers, nearly 80% of firms decide to grow, but about 30% of those firms wish they had not. Philip Palaveev, a senior manager at Moss Adams, spoke about growth as well, disclosing some of the findings of the 2006 Moss Adams Financial Performance Survey of Advisory Practices. Palaveev revealed that leveraged practices have a higher gross margin, and reiterated the idea that people are needed to grow a business. Therefore, according to Palaveev, the best way to grow a firm is to develop it internally, using junior staff to leverage advisors. discussed how to grow–or exit the business–by the buying or selling of a practice. Lincoln Anderson, the chief economist of LPL Financial, provided attendees with his bullish insights on the markets and the economy in the wake of the mid-term elections and provided forecasts for the New Year.–it looks pretty rosy, on the short term, citing strong corporate profits, companies still controlling their costs, and labor costs are not accelerating. As for any changes emanating from Washington, Anderson doesn’t expect anything substantial to happen until after the ’08 elections.

The conference concluded with Tom Giachetti of the New Jersey-based securities law firm of Stark & Stark reminding attendees that it’s not nearly enough to have a policies and procedure manual; to make sure it reflects the way you really do business, “read your manual,” he preached, and “don’t dumb down your docs.” Giachetti’s compliance session was followed by a town hall meeting, where the “faculty” answered the questions left unasked throughout the Summit. Most questions revolved around motivating employees, compensation, building career tracks, and when and how to add partners to a firm. Tibergien had the last word on how to build a practice where employees are committed. “You can’t motivate someone,” Tibergien pointed out, “you can only de-motivate them.”

Additional reporting on the Summit will appear in the news section of the January 2007 issue of Investment Advisor.


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