Ric Edelman in no uncertain terms lambasted Wall Street and most financial advisors for focusing on the rich, which he says is no way to grow an advisory firm that delivers services America needs.
Edelman, chairman and CEO of registered investment advisor Edelman Financial Services, delivered his pointed message this week to about 300 attendees at the 3rd Annual Financial Advisor Retirement Symposium in Weston, Fla. The conference is produced by Financial Advisor and Private Wealth magazines. The Edelman Financial Group, based in Virginia, has 17,000 clients, 30 offices nationwide and nearly $8 billion in assets under management and expects $110 million in revenue this year. The firm has gone through a number of business transitions: It was bought in 2005 by Sanders Morris Harris, went private in 2009, went public in 2011 and last month announced it's going private again in a transaction valued at about $260 million, or $8.85 a share. Edelman said he expects the most recent transaction won't be the last.
"This is counter intuitive for most of Wall Street. Everybody in the financial services sector spends all of their time trying to cater to the high net worth, some of them beyond that go into the family office environment. We believe in just the opposite. We believe in serving the mass affluent. Nobody else seems to be paying attention to that. Everybody considers it too pedestrian to serve people with a lousy hundred grand," said Edelman.
Edelman noted that it was reported in December that some Merrill Lynch advisors won't get paid on new accounts that total less than $250,000. "It's really astonishing," Edelman said. "They basically said to the 99 percent of America we don't want to talk to you, we don't want to serve you. And everybody wonders on Wall Street why America hates us."
But it wasn't just Wall Street brokers Edelman criticized. "How many consultants in our field, how many articles in Financial Advisor magazine and all the other publications have you seen written by those consultants and coaches and experts who say you should take your clients on an annual basis, rank them A, B, C, and fire the Cs to make more room for the As?"
"Our industry is focused and fixated on attracting and serving the high-net-worth client," he noted. "Guess what? There are only so many millionaires in this country. And guess what? You are all chasing them. Go right ahead, leave the guy with a hundred grand to me. I'm perfectly content to be the only guy in America serving that person."
He praised advisors who attended the conference for wanting to expand their skills and learn more about what they can do to build their practices. Edelman offered insight on how his firm has grown since he founded it 25 years ago and how advisors might grow their own businesses.
Freely sharing advice with the public in as many forums as possible is key, he said, because advisors need to express clearly how their firms can serve clients. Edelman has identified 25 things advisors should be doing to grow their businesses but most don't do any of them, he maintained. They include participating in radio and television shows; publishing books, newsletters, white papers and other reports; having a robust Web site; and giving seminars to consumers.
There are two different approaches, in a nutshell, to growing a practice. "You can either be Martha Stewart or you can be Frank Perdue. Frank will sell you a chicken. Martha will teach you how to cook a chicken.
"You need to decide which of the two you want to be," Edelman said. "Most of the financial services sector acts like Frank. They are selling their services to the public. I never engage in that and never have in 25 years and never will. Instead we act like Martha Stewart: We teach people how to cook chickens. We take our advice and we share it with consumers, freely, openly, repeatedly. ... We hope that a few of them will say, 'I don't want to do it on my own. I need to hire someone.'"