You Are Like Your Clients

I asked Tim Kochis the question I pose at the end of nearly all my interviews these days. “What,” I said, after we had discussed Tim’s firm’s big merger with Quintile Wealth, which to me seems like a watershed event (see page 37), “if the market tanks?” I ask because I worry that this wonderful growth in the independent advisor market that we all celebrate has taken place over a fairly long and mostly benign market stretch. “What will those big wirehouses and banks do to you competitively if times get rough? What if they’ve learned their lessons from all their recent scandals?” Having had some thoughtful discussions with Mr. Kochis over the years on topics as diverse as the internationalization of financial planning and the woeful state of racial parity in the profession, I was not surprised by his response. He’s unconcerned over those deep-pocketed firms eating Kochis Fitz/Quintile’s lunch. “Don’t you see, Jamie, for them it’s just a sideline; for us, it’s what we do.”

I hope he’s right. There are plenty of reasons to think advisors whose only job is giving advice are grabbing market share from wirehouse brokers and others whose primary job is selling product, though I’ve never seen any credible data proving the point.

Certainly, Schwab Institutional’s growth over the past 20 years of serving RIAs is impressive (RIA assets custodied there stood at $581 billion as of the end of the third quarter), and Fidelity Institutional Wealth Services reported in mid-November that it had crossed the $300 billion mark in advisor assets. You shouldn’t sneeze at TD Ameritrade (at least it never merged with the now very troubled E*Trade). Moreover, with Mark Tibergien at the helm of Pershing Advisor Solutions, it’s a safe bet that custodian will be making some serious forays into its competition’s market share.