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Majority of Public Doesn’t Know RIA Model Exists: Advizent’s Goldman

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Count on Charles Goldman to give it to you straight. He is, after all, on the forefront of the fiduciary battle, and the company he co-founded, Advizent, counts John Bogle and Robert Kaplan as board members.

His presentation at MarketCounsel’s Member Summit 2012 was titled “The RIA Industry: Trends, Facts and the Need for Branding,” and it did just that; hammering trends, facts and the overwhelming need for advisor branding.

The information he delivered made it abundantly clear why branding is so important.

“Fully 84% of investors do not know the RIA model even exists,” he said in response to his own question of why wirehouses maintain the asset levels they do, despite scandal, headline risk and a “broken business model.”

“Your clients think you are a broker, and don’t know the difference between a broker and an advisor. Most shocking, 66% of clients think their advisor is a fiduciary, and that’s being generous. I saw one Cerulli study that pegged the number at 85%. Yikes.”

The bulk of Goldman’s presentation was given to debunking “myths” promulgated by “our friends in the press.”

“Let me start out by saying everything’s crap,” Goldman said to laughter. “It’s a tough world. We have low interest rates, volatile markets, a struggling economy, poor political sentiment, regulation changes and a euro zone crisis.”

But Americans themselves, he added, are optimistic about their economic situations, as poll after poll demonstrates.

“The stock market certainly doesn’t reflect poorly on the current situation,” he added.

The good news, he added, is that advisors are in an industry with the “wind at their backs.”

“The market for advice is huge and there is money at all levels,” Goldman noted. “People are leaving banks and due to a lack of trust, revealing a real opportunity for advisors to build their businesses by building trust.”

One myth is that the high-net-worth is where advisor need to target their effort, but technology means the low-net-worth can be profitable and there is a “ton of money in the middle.”

“Another myth is that we are all retiring and it will be all about losing assets to de-accumulation,” he countered. “Yes, people are retiring, but money is headed this way as well.”

A third myth involves the notion that “the wirehouses are done and banks are done.

“Wirehouses still manage over half of the assets in this country. Their model may be broken, but they’re fixing it. The notion that you’re the only game in town that’s winning is just false.”

He then hit upon numbers that got the attendees attention. He claimed $2 trillion are currently held with RIAs out of the $13 trillion in managed money and $28 trillion in investable assets. Currently, firms with $500 million in assets under management and above manage 61% of those assets.

“This, obviously, is a huge opportunity,” he noted.