A new think tank of registered investment advisors with inside knowledge of the RIA industry on Tuesday released Tuesday a white paper that flags the four major challenges ahead for independent advisors and lays out what they can do to position themselves for the future.
The white paper is written and published by the Alliance for RIAs (aRIA), a study group that combines the knowledge of six successful RIA firms that collectively manage more than $20 billion of client assets. It can be downloaded free at www.allianceforrias.com and is the first in a series of four, titled Creating Value and Certainty Within Your Independent Advisory Firm. The second paper will be published in mid-November, and papers three and four will be published in the first quarter of 2013.
Group members of aRIA include Brent Brodeski, CEO of Savant Capital; John Burns, principal at Exencial Wealth Management; Ron Carson, CEO of Carson Wealth Management Group; Jeff Concepcion, CEO of Stratos Wealth Partners; Matt Cooper, president of Beacon Pointe Wealth Advisors; and Neal Simon, CEO of Highline Wealth Management. Both Beacon and Highline were selected for AdvisorOne’s 2012 Top Wealth Managers list.
In addition, John Furey (right), principal at Advisor Growth Strategies LLC (AGS), serves as aRIA’s managing member and was involved in the think tank’s formation. A former director of strategic business development at Schwab Institutional, Furey has been involved for years in the transition process for brokers who wish to become independent RIAs. AGS bills itself as providing “customized business management solutions for independent firms seeking to aggressively grow their business and for financial advisors in transition.”
In a phone interview with AdvisorOne on Tuesday, Cooper and Furey said that the first white paper, The Evolution of Value Creation, presents aRIA’s point of view on how the industry is changing and what successful firms are doing to position their businesses for the future. It includes an analysis of the challenges independent advisors face when breaking away from a wirehouse, growing an RIA practice and creating value in a practice.
“It’s not uncommon for independent advisors to grow their business to a certain point and then to plateau with a certain group of clients that provide them with cash flow for their lifestyle,” Cooper said. “They settle in and do a fantastic job of serving those clients for five to 10 years. What they don’t realize is that while they have the same cash flow coming in, and it may even have increased with market growth, their business is actually degraded in terms of value because the certainty of future cash flows is in serious question because their average client age is now 10 years older.”
Read on to learn more about business value and what aRIA’s white paper identifies as the four most critical areas of concern for independent advisors.
The Alliance for RIAs, or aRIA, has flagged these four major challenges that independent advisors may face in the future: