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Industry Spotlight > RIAs

Four Top Takeaways from the 2017 MarketCounsel Summit

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As the last stop on the conference circuit for the year, the MarketCounsel Summit is known for its high-profile speakers, elegant venues and the premium networking experience it gives advisors, select service providers and industry luminaries.

The 10th-annual event held to that lofty standard as a content-rich experience that provided an interesting view of the top issues facing the profession. Held at the Fontainebleau resort near Miami for four days in early December, it hosted over 500 attendees, eager to learn about the latest development.

According to conference host, MarketCounsel CEO Brian Hamburger, business continuity is critical to the industry today, (though it’s considered by some to be a “boring topic”).

Hamburger pointed out the problems tied to not having a continuity plan, providing eyebrow-raising examples from his firm’s legal and compliance work on situations that were “entirely preventable” but resulted in bad outcomes, simply because the firms didn’t plan.

To remedy this situation and provide a bright focus on its importance, Hamburger and his event team stepped out on a long limb to bring in former CIA Director John Brennan and Princeton professor Jacob Shapiro, who explained what advisors can learn from terrorist groups when it comes to creating long-lasting organizations.

The premise, we were led to believe, is that if terrorists with limited resources can survive in a high-mortality profession, advisors can (and should) create continuity plans that can stand up to the test of the markets, shifting client expectations, an aging workforce and a changing industry.

Brennan and Shapiro outlined how terrorist groups such as Al Queda and ISIS have informal yet detailed processes for their organization charts, financing, resource deployment and far-flung, disparate communication networks.

While definitely a stretch in the execution of the continuity message, the information may have persuaded advisors and others at the event to make it a priority to address their continuity plans upon returning home from the conference.

Protocol Scene

The second big takeaway from the conference related to the Broker Protocol, a far-reaching agreement among Wall Street firms to enable the free movement of advisors, as long as the departing advisor only takes certain client information— such as names, addresses and emails.

If the departing broker adhered to this contact standard, then the losing firm would not sue or file temporary restraining orders against that departing broker and his/her new firm.

Recently, both UBS and Morgan Stanley have left the protocol, so the buzz at the conference concerned what’s next for the industry. To shed some academic light on the matter, MarketCounsel brought in two finance professors from the University of Kentucky, who revealed the results of their study about labor movement in financial services.

Chris Clifford and William Gerken’s findings show that protocol firms have been better off than non-protocol firms, because advisors who feel empowered to move their businesses take better care of them, are more productive and have fewer compliance issues vs. those who do not feel that they have labor mobility.

As a result, the fact that Merrill Lynch decided to stay in the protocol validates that thinking, the conference presenters said.

The breakaway service providers, consultants, recruiters and custodians at the MarketCounsel conference are optimistic that the breakaway movement will continue; many believe UBS and Morgan Stanley are being very short-sighted in their exit from the protocol.

M&A Deals

Another clear content priority for the conference leaders concerned the latest developments in mergers, acquisitions, succession planning, consolidation and capital infusion.

Several high-powered panels with top advisors growing inorganically via M&As, along with the top executives of the aggregators and roll-up firms, provided helpful advice for firms thinking about a strategic move.

“The success of the RIA space is becoming very well known and is bankable,” said Dynasty CEO Shirl Penney, about why there is so much capital now flowing to the industry.

The key, according to Rich Gill of Wealth Partners Capital Group, is that advisors need to prepare early and invest in their firm’s operations, technology and efficiency so that they can command the highest multiples and have leverage by working from a position of strength in their relations with outside investors.

Consolidation was another important theme in this content track, and this trend seems to favor larger firms, according to Ric Edelman, executive chairman of Edelman Financial Services: “The bigger firms will crush the smaller firms.” Edelman also predicts that the industry will soon have a “trillion-dollar RIA,” as more firms to grow their size and scale quicker than before and hence dominate markets.

Indie Dominance

The final big takeaway from MarketCounsel was the very optimistic view of most, if not all, speakers that growth would continue in the independent space.

The mega trends are lining up nicely for RIAs, as the industry continues to face more demand than supply. The fiduciary model will ultimately win in the marketplace, many presenters said.

Well-known advisor and prolific author David Bach described how he is launching a new national RIA that is growing fast. Bach’s advice on how to take advantage of these trends is, “It’s all about marketing. The big firms never stop marketing,” and advisors shouldn’t either.

To learn more about what went on at the 2017 MarketCounsel Summit, check out the many tweets on the SMSUM17 hashtag on Twitter.


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