Bigger Isn‚t Always Better

I enjoyed reading your "Parting Shot" column in October‚s issue that challenged the notion that independent shops would have to merge to survive.

Prior to establishing an independent advisory firm in January of this year, I worked for one of the large and prestigious firms that you referred to, where I witnessed firsthand their inability to penetrate the high-net-worth marketplace with an online, phone-based advisory business.

Why? While they had plenty of in-house expertise on various issues of importance to affluent investors, they failed in their attempt to deliver such expertise through such an impersonal channel. While there are clear benefits to firms merging in an attempt to broaden their areas of expertise, the key to success is how it is ultimately delivered to the client. After having worked for several of the largest financial institutions in the country, I‚m betting that it‚s the independent advisory firm that can deliver sophisticated advice in a high-touch, highly customized fashion that wins in the end.

James E. Kearney, CFP, CTFA
Quadrant Capital Management LLC
New York, N.Y.

Practice Management Must Improve

I just read your "Parting Shot" in the October issue of Financial Advisor. I wanted to clarify my position on this issue, for whatever it‚s worth.

Thin margins and a low capital base are possible reasons why small firms may be compelled to merge, but those are not the only reasons. When we do our industry surveys for the FPA and our consulting on strategy and practice management with firms, we find some recurring themes:

• No time to manage and produce revenue

• No time to serve old clients while pursuing new clients

• Can‚t keep up with technology changes

• Can‚t effectively recruit, retain and reward staff