As I write this note on October 14, there remains some skepticism that the recession is over and that we have entered a true recovery, though the healthy third quarter earnings of some of the major brokerage houses, umm, I mean banks, are providing particular cause for hope and helped push the Dow over 10,000 at the close on October 13.
One sector of the economy appears to be booming, however, and that’s the survey industry. Everyone, it seems, wants to probe the behavior of the high net worth, for instance (think the CapGemini/Merrill Lynch World Wealth Report, or the U.S. Trust Survey of Affluent Americans), since those folks constitute the Holy Client Grail of advisors like yourselves.
There’s another group that social scientists are studying more and more, however: You and your kind. Sitting on my desktop right now are four new research studies on the advisor universe. Some can boast serious longevity, such as the annual Rydex AdvisorBenchmarking Research Study, which has now been conducted for 10 years (Disclosure: the Rydex AB studies on RIAs and the analysis of the data by Maya Ivanova have long formed the backbone of Investment Advisor’s PracticeEdge e-newsletter). Another, the Moss Adams study that long carried the imprimatur of Mark Tibergien, now at Pershing but still an IA columnist, is a continuation under slightly new management of a long-running, highly respected study of advisors. Then there are two new studies. First is a Financial Planning Association study of 1,200 FPA member firms focusing primarily on compensation for job titles within planning firms, called the Financial Planning Salary Survey. The second is the premiere research study on People and Pay from FA Insight, the firm Investment Advisor has partnered with this year. Headed by principals Dan Inveen and Eliza DePardo, whose numbers-crunching ability, and data-based insight is, we believe, second to none, the key findings of the 2009 FA Insight Study of Advisory Firms are presented as the first of our two-part special report on RIAs in this issue.
Dan and Eliza’s major takeaway is that the most successful firms continually invest in people, and that while managing costs, those best firms do so in a way that avoids “compromising the skill and talent that sets a firm apart.” The study provides the big picture, but our second RIA Report feature story relays the voices of advisors themselves, (Disclosure: all of them custody at least some of their clients’ assets with TD Ameritrade Institutional), who shared with me their individual stories of what they learned from the markets and economic crisis, and how they applied those lessons to their practices. As is invariably the case, that conversation with advisors who are in the trenches helped restore my confidence in your ability to thrive even in adversity, while highlighting the dedication you express every day to your clients.
Are there too many studies on advisors? Philip Palaveev, the former Moss Adams researcher and now president of Fusion Advisor Network, has never seen it that way (Final disclosure: Philip regularly writes for Investment Advisor and our sister publication, WealthManagerWeb.com). Whenever I broached the subject of covering the findings of a competing research report, he was always nonplussed. He wasn’t worried about competition, he’d say. In fact, Philip felt that the more data the better, since that will help all of us understand and foster growth in this still new industry. From his lips . . .