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January 31, 2018 at 09:47 AM
Independent broker-dealer executives generally recognize that a tough path lies ahead for the business due to regulatory, costs, IT and other challenges. They disagree, though, on exactly what that means for their firms and affiliated advisors.
“There will be fewer advisors and fewer broker-dealers in the future, no doubt,” said James Poer, president and CEO of Kestra Financial, during a panel discussion Tuesday at the Financial Services Institute’s OneVoice conference near Dallas.
Data released late last year from the Financial Industry Regulatory Authority, for example, shows the number of member firms dropping to 3,835 in 2016 from 5,374 in 2002.
In Poer’s view, the IBDs that aggressively invest in people, technology and related resources “are going to be the winners.”
For Cetera Financial Group CEO Robert Moore, these investments should translate into the creation of “an advice-centric experience for clients.” They also must include “a shift in [advisor] engagement away from professional product sales to more objective planning and solutions,” he explained.
Plus, Moore says, IBDs must marry technology and human capital, so that advisors’ — and the industry’s — offerings adequately address the future needs of clients.
“It’s about the information you have about clients and how you create touchpoints, emotional responses … it all dovetails into a very delightful and exciting opportunity in our profession and is a way to distance ourselves from” robo replacements, he explained.
Moore sees advisors winning out over IT. “The depth and context for relationships will be highly transformation over the next few years,” he said. “It’s not about investment management but about advice — as the tech curve progresses and human touch becomes more important.”
This means firms and advisors need to “get more efficient and more effective and deeper in their relationships,” he said.
They have a pretty big incentive to do so, he points out: “Over next 10 years, the money in motion will … have a big T [for trillion] on it… We just have to equip and prepare advisors to do all this [change], and [clients] will pay what they pay today.”
Moore sees advisors as being able to keep and even grow fees by offering concierge-type services. “I don’t believe in [fee] compression … But there’s a lot of work to be done,” he said, adding that he’s “excited” about the future of the advice business.
