Financial Insights
with Dean Zayed
Which RIA Trends and Opportunities Will Continue in 2016? Dean Zayed, president and CEO of Brookstone Capital Management, shares his thoughts on current trends for registered investment advisors (RIAs) and their place in the ever-changing financial landscape today. Dean, industry publications continually share stories about the trend in wirehouse advisors choosing to go independent. How do you see the RIA space evolving in 2016? A: I think the reason you see so many advisors moving into the RIA space is because they’re realizing the need for flexibility and a much wider range of products in order to stay competitive in today’s volatile markets. Investors are demanding more choices and more active management from their advisors, and advisors find greater ability to provide those things when they’re independent of strict wirehouse formulas. Moving forward, I think advisors will continue to see the need for being able to provide investment options from a more actively managed business model than they might find with wirehouses. I’m sure the recent extreme volatility has only served to reaffirm that many advisors need — and probably want — their independence and objectivity in order to achieve this. The RIA model is an ideal platform for allowing this to happen. Many agents have a clientele that was originally built around insurance products. Their best clients could easily be another financial advisor’s best prospects. In your opinion, who are the insurance agent’s top competitors? A: The insurance-only advisor is a rarity today, except in some specialized situations. The general public is demanding a larger selection of products and skill sets from advisors today. They want to work with one person they trust to manage 100% of their assets. If you’re limited by being able to provide advice only as an insurance agent, you simply won’t be that person. This is where you come in direct competition with agents and advisors who are certified with their Series 65 financial advisor’s license. To remain competitive, advisors are now required to wear multiple hats and provide access to several kinds of services. Becoming a Series 65 licensed financial advisor — preferably with
the support of a robust turnkey asset management platform (TAMP) behind you — will allow you to provide solutions that motivate clients to retain you to manage their entire portfolio. It’s easy to see how expanding your skills this way can help you add a new revenue stream to your current book of business and attract new clients, including high net worth clients. Do you feel all insurance agents should have the ability to provide investment management services to clients? Why? A: I respect that some traditional insurance agents would choose not to provide investment services to clients. However, the majority of insurance agents could very well benefit by embracing the idea of providing investment management to their existing clients. Many insurance customers are also investors, so there is a logical transition between the two.
“advisors will continue to see the need for being able to provide investment options from a more actively managed business model than they might find with wirehouses” And just as important, insurance customers are constantly subject to big-brokerage advisors asking for their insurance business. Why wouldn’t insurance agents want to compete on a level playing field against financial advisors for investment business? Advisors at the big financial services firms and agents at the big insurance firms have plenty of opportunity for training in practice management. RIAs and independent agents are often in small shops. How can they get practice management training? A: This is one area where partnering with the right TAMP can be so important. While an advisor’s independence empowers them to make their own business decisions for their practice, they want to be careful about becoming too isolated. Brookstone has always put a premium on providing our advisor network with the highest-quality, most comprehensive training possible. One of our top priorities is to continually equip them with up-to-the-minute investment intelligence and practice management skills. I would strongly suggest to any advisor that they make it a priority to find a reliable, continual SPONSORED CONTENT
source of training in both investment and practice management. Assuming most RIAs will want to grow their practice in 2016, where do you see their new clients coming from? A: Well, for those insurance agents who are considering adding financial advisory capabilities to their practice, their first new clients will be their existing clients! They would quite possibly experience a new revenue stream from their current book of business, especially with clients who usually prefer to continue working with a resource they’ve grown to trust. Today, there are about 76 million baby boomers out there, and approximately 10,000 retire every day. Advisors who focus on this large segment of the population will need to become experts on income planning. They’ll be asked to guide clients from simply accumulating assets during their working years to properly distributing these assets over their lifetime. What do you see for the RIA space moving forward? A: It has become more and more apparent that advisors have deliberately left the big-firm model to run their own business, and more insurance agents are adding investment management to their service offerings. In either case, I think their next step — and it’s a very important one — is to choose their strategic partnerships with TAMPs or other service providers very carefully. This will have an immediate impact on the growth and success of their new endeavor as it will directly affect their access to the kinds of imperative operational support systems mentioned earlier. Also, whether working alone or with a TAMP, advisors will be called upon to establish the best investment approach on a caseby-case basis for their clients. This is obviously where they earn their stripes, and rightfully so. For years, the big brokerage firms have been recommending a buy-and-hold approach that was reinforced through a fixed allocation method of investing. This is most likely responsible for the recent flight to the flexibility of the RIA space, because independent advisors are exercising flexibility and creativity in building portfolios — and not because it is a personal preference on the part of the advisor to do so, but because clients are demanding a more nimble approach in today’s unpredictable markets.