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Transitions Magazine

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3. The sudden emergence of online practice management advice and services, which greatly democratizes the information needed to run a profitable practice. The white paper specifically references the ActiFi organization in Minneapolis, MN and Quantuvis Consulting in Redmond, CA, both of which allow RIA firms to compare their business metrics with other firms, and to track their own progress in areas like costs, profitability (and profitability per advisor), and top-line growth. 4. Better implementation of professional software, and more user-friendly software programs and platforms— offering unprecedented levels of scale and staff leverage, far beyond even what was available before the market downturn. 5. The market downturn itself, which caused many RIA firms to reassess their own profitability, and address issues of systematization, efficiency and client selection.

The white paper notes that today’s RIA universe is highlyfragment and dominated by one-person practices. But it envisions a period of consolidation, leading to a distribution of practices sizes not unlike that found in the legal or accounting world, where we find organizations filling every ecological niche from the solo practitioner to the large local presence to the regional firm to the large national organization with multiple branches and multiple areas of specialty. As these firms become larger and more sophisticated, and as they increasingly recruit the more astute and clientfocused members of the retail brokerage community, they will effectively become the local brokerage office’s worst nightmare, says Veres. Unlike many of today’s smaller solo practices, they’ll have the size and scale and (local) market presence to go headto-head with a large branch office for desirable clients, plus their clients/customers will be able to shake hands with and work across the table with the principals of the firm. In addition, the former brokers will be showing prospects and potential clients some of the sales agendas that are not easily visible in the brokerage world, and perSeptember 2010

haps also offer a breakdown of hidden costs. And finally, these larger RIA firms won’t have to share their revenues unequally with the larger entity, meaning they can charge significantly less to the end client, and still be more profitable for their advisors and principals. Along the way, The Future of the Profession white paper looks at the metrics of larger RIA firms vs. smaller firms, compares some of the results of various compensation and staffing studies, identifies a powerful new marketing message for RIA firms, hypothesizes how RIA firms will move their service package—profitably—into the middle market, and shows how some firms are already doing it and actually benefiting their higher-end service division in the process. It posits that effective regulation of the entire financial services industry is about to move into the civil courts, and looks at how democratized, online marketing services and training programs are increasing the marketing sophistication of RIAs around the country. The full white paper—111 pages in all—can be downloaded for free at the Inside Information web site:

In the News

fees of up to 1.25% of client assets. In the future, they’ll have to show how they’re controlling management and custodial costs, and I would expect the client’s all-in costs to be under 2% a year.”



Profile for Financial Forum Inc.

Transitions Magazine - September 2010  

Business Management for Independent FInancial Advisors

Transitions Magazine - September 2010  

Business Management for Independent FInancial Advisors