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May 09, 2013 at 08:31 PM
“You’re the only group of people in Vegas who understand that when I say Monte Carlo, I’m not talking about the casino down the street,” Jim Dario joked at the opening of his lunchtime keynote at the NAPFA Spring Conference 2013 in Las Vegas on Wednesday.
Dario (left), managing director of product management for TD Ameritrade Institutional, tried to get as specific as possible in the time allotted about the role of technology in boosting the advisor’s business.
“We are now four and a half years since the economic crisis began, and May 2013 feels very different from May 2009,” he said. “Clients feel more confident, but they’re essentially asking you to hold their hands as we move from crisis to crisis. The AP wire service gets hacked, and the markets plunge. They’re looking to you to explain that.”
Challenges he noted in the independent space include the coming regulatory changes, the fact that Wall Street is looking to reinvent itself in the fee model, and the “war for talent.”
“In the next 10 years, there will be an estimated 250,000 shortfall of people in this industry,” Dario said. “It mainly comes from the fact that wirehouse training classes, which were a feeder for our industry, are diminishing.
“The opportunities, however, are just as great,” he added.
Dario argued the independent channel is the fastest growing channel in financial services, and has experienced 68% growth since 2005.
“One group’s pain is another group’s gain,” he said, before noting the $4 trillion still held at wirehouses. “But [advisor] Ric Edelman shows in his research that big banks come in dead last in consumer trust, and this is the third year in a row that’s happened.”
Moving on to a discussion of technology in the advisor practice, Dario noted it’s the fourth decade since the move to independence began, but the independent channel never set up the necessary tech infrastructure.
Citing the research and consulting firm FA Insight, he said between 40% and 45% of revenue goes to overhead, and the number—or spread—isn’t changing as it should with the firms’ growth.
“As they starkly observed, too many firms are simply not sustainable.”
