Page 15 - Investment Advisor April 2021

Just last month, we saw Voya sell its been for IBD advisors to seek out the RIA applications for financial planning
IBD operations to Cetera, while Advisor superior technology they can access as and client portals, Cambridge is provid-
Group has been on an acquisition tear an independent RIA, rather than making ing advisors with choice and flexibility
of its own, rolling in several well-known do with the “lowest common denomina- in how they want to consume technol-
IBDs in the past couple of years. At the tor” technology of their BD. ogy and run their businesses — the hall-
same time, LPL is completing its tie-up The result we will see is the “RIA- mark of the RIA model.
with Waddell & Reed, and the list goes ifying” of the IBD industry and their Along these same “RIA-ifying” lines,
on. In a consolidating industry, scale platforms, and they will find growth LPL has announced probably one of
becomes ever more important, and that opportunities and remain alive to sus- the bolder steps to invest in the sup-
is where the action has been. tainably support their advisors. Early port tools and business services that
efforts of the RIA-ifying movement independent advisors need to stay
FUTURE LANDSCAPE manifested in most of the major IBDs afloat and offer them to outside advi-
What will the IBD space look like going creating RIA custody platforms. This sors. This is particularly important as
forward? Perhaps there are some the wealth space becomes even
clues to that future in how the “Innovate or die,” Peter more competitive, with new digi-
most successful and fastest- tal players like Goldman Sachs
growing segment of the wealth Drucker famously said, and the impending launch of
space — the independent RIA — the Schwabitrade Death Star —
has evolved. a key theme playing out soon to be operationalized and
RIAs are truly independent, unleashed on both the retail and
meaning that their fiduciary mod- in real time here in the RIA custody stages.
Commonwealth,
another
els and compensation are not tied
to any product or platform. They independent wealth space. respected IBD, also has launched
exist as separate entities, charge business consulting services to
a fee for services rendered and are paid was done as a defensive measure to help advisors run better businesses as
by the client, not any product. This has persuade their breakaway advisors to well as increased the number of firms
the double benefit of allowing RIAs to at least stay with them in a custody they support as IARs.
“shop the street” for the lowest-cost, relationship rather than move all their Because LPL and Commonwealth
highest-quality products and services assets to one of the formidable RIA- plan to offer these services to outside
from any provider they recommend to custody competitors and lose the advi- advisors as well, this is solid evidence
their clients. sor and assets forever. that the IBD model does not have to be
By unbundling advice from a prod- limited to antiquated, commission-based
uct transaction, all sorts of innovations GAME-CHANGERS frameworks. IBDs finally can emerge
in product structures, cost eliminations But beyond just an RIA custody play, the from their legacy models to become true
and business operations are happen- new paradigm will require these IBDs open architecture platform and technol-
ing, which are completely rewriting the to change the advisor-client experience ogy providers, facilitating advisor suc-
wealth management playbook. they are offering to provide more open cess across affiliation channels.
Most notably, when it comes to tech- architecture, better technology, low-cost This RIA-ifying movement portends
nology, RIAs can hand-craft their tech- products and service models that are brighter days ahead for this once-glo-
nology stacks to customize and choose necessary for advisors to succeed in a rified but now embattled financial ser-
the components they want to operate much more challenging and competitive vices sector. “Innovate or die,” Peter
their businesses. And with RIAs’ out- environment. Drucker famously said, a key theme
sized growth, there has been an amazing the most respected IBDs in the industry, playing out in real time here in the inde-
One example is Cambridge, one of
eelnosiva/stock.adobe.com segment, attracting investment from which recently launched its new advi- Timothy D. Welsh, CFP is president, CEO and
pendent wealth space.
renaissance in the advisor technology
sor workstation and operating platform,
some of the tech world’s most success-
ful and influential platforms to feed this
Clic, to much fanfare. Leveraging cloud-
founder of Nexus Strategy, LLC, a consulting
growing demand.
native technologies to bridge the gap
firm to the wealth management industry. He
between the back-office systems and
In fact, one of the main drivers of
can be reached at [email protected] or
integrate those with the most popular
the “breakaway advisor” movement has
on Twitter @NexusStrategy.
APRIL 2021 INVESTMENT ADVISOR 13