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May 29, 2018 at 06:10 AM
“In the evolution of the wealth management business, we are now entering a period of the most profound change that we have ever experienced,” said Mark Tibergien, practice management expert and CEO of Pershing Advisor Solutions, during his keynote speech at the SS&C Advent’s Black Diamond Executive Forum held in mid-May.
According to Tibergien (the monthly contributor of this publication’s “Formula for Success” column), there is a coming divide in the independent RIA marketplace between “lifestyle practices” and “enduring businesses,” which he highlighted for more than 100 leaders of the industry’s top advisory firms, who gathered for two days in St. Augustine, Florida.
“There are roughly 28,000 independent RIAs in the industry. and yet only 650 of them have more than $1 billion in assets under management. This means the most of firms are functioning as small practices and will die when the owner retires,” he explained.
This has big implications for the industry, according to Tibergien, particularly because these firms potentially are not holding true to their fiduciary duty to put clients interests first by creating an organization that will live beyond the founder.
The typical practice is “personality driven” in that the firm is highly dependent on one or two key leaders, which suggests the mortality of the firm if something should happen to them, the Pershing executive explained.
“If you have failed to plan and have not done the final step, then are you acting in the best interest of clients?” he asked both the audience and, more broadly, the industry.
Being the practical-minded executive that he is, Tibergien didn’t leave the group hanging as he provided secrets to success for advisors that he has developed through long-term study of the industry and his own entrepreneurial endeavors.
To become one of those enduring businesses, firms should have a clear mission, vision and strategy to not only define who an optimal client is, but to then structure the firm to support that ideal client. Everything from the marketing message to the office environment, technology and client-service experience needs to be aligned along that vision, especially in terms of staff development.
“Enduring businesses are process driven, not leadership driven,” Tibergien said, recommending that firms develop a human capital plan that is aligned with the firm’s overall vision. “This means that you create a deep bench of talent and invest in your people so much so that you ultimately value a great employee more than a great client, which is a pretty dramatic mind shift for most firm owners.”
The Client Experience Next, the executive encouraged advisors to “create real engagement” with clients by focusing on the client experience, a concept so important and popular these days in the management and technology spheres that it now has its own acronym: CX. In Tibergien’s mind, though, CX is not solely about technology.
“What we mean by creating real client engagement is to focus on the experience in totality,” he said.
Like others in business, Tibergien once had a tight connection on an airline flight, and due to the large distances between gates, thought he would miss his connecting flight. The airline, however, had other plans.
Thanks to Tibergien’s priority status as a million-mile flyer, it sent a gate agent in a sports car to pick him up as he deplaned and literally drove him across several runways to the cross-airport gate so he could make his flight in time.
