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Financial Planning > Charitable Giving

A Tipping Point?

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It’s always easier to discern a trend with the use of hindsight. But I believe that the business of independent advice-giving has finally reached a turning point. My first issue as managing editor of Investment Advisor in 1999 featured a cover story by Bob Veres writing about the CFP Board’s new (at the time) practice standards. It was pretty inside-baseball stuff that mostly focused on the disagreements that CFP certificants had over the standards. Sparing you the details of the issues that surfaced over the next 12 years, it seemed that many advisors continued their navel gazing, as in the “fees versus commission” or the “Do you need a CFP to be an FPA member?” debates, or even, dare I say it, the fiduciary imbroglio. However, in 2011 the independent advice business has finally come of age.

I say that because the smart money all around us, and the regulators, have “discovered” independent advice-giving. One of my first clues was when Sallie Krawcheck said in a January 2010 teleconference that despite “industry chatter” to the contrary, “we haven’t seen nearly as much” movement from the brokerage channel to the RIA space. Krawcheck, the head of Merrill Lynch, BofA’s brokerage force, was talking about RIAs and claiming that Merrill and its wirehouse brethren were not losing people to the RIAs. Pooh-poohing the competition usually indicates that you actually have competition, and you’re concerned about it. The Yankees don’t have to say that the Mets are no good (and I’m a Mets fan).

A second sign of this transformation has been the increased political savvy and efforts of both the Financial Planning Association and the Financial Services Institute. They disagree on a number of topics, but they agree heartily that while the inside baseball of internal discipline is important, getting the independent advice model’s voice heard in Washington is where you have to start, especially in the wake of the financial crisis and Dodd-Frank.

The third sign has been the re-emergence of the advisor rollup firms. Take HighTower. It wouldn’t surprise me if CEO Elliott Weissbluth has a philanthropic streak, but he’s not running a charity at HighTower, and his big-name and deep-pocketed backers are no dummies, either. Rudy Adolf at Focus Financial and Joe Duran at United Capital are pretty bright people, too, as are their backers. A new entrant to this space is Merion Wealth, which is backed by a private equity firm. The smart moneyists see the value of independent advice and are betting that there will be a big payoff for the early adopters.

The irony to me is that it’s the aging of the pioneer independent advisors that is leading to this crossroads. When you’re in your middle to late 50s, you do begin to wonder what all your years of hard work will amount to in terms of a legacy but, more prosaically, what your lifestyle will be like when the daily grind becomes too much. After all, advisors are in the planning business. That’s why all the IBDs and the custodians, and these rollup/consolidation firms, are eager to help you deal with the next stage of your careers. For once, you’re a hot ticket. Explore your options.


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