Many advisors evaluate themselves and their firms in terms of how their clients are doing, not by their business’s top and bottom lines. That is as it should be.

Nonetheless, the financial advice business is changing rapidly. So the reality is that if advisors are going to be there to serve clients, they need to ensure they have viable businesses built to last.

In last month’s issue, senior editor Jeff Schlegel took a fascinating look at how financial advice will evolve in the next two decades. Nobody’s crystal ball is perfect, but many independent advisors expect that online financial planning services may displace wirehouse brokers as their primary competitors in the next decade.

I’m not sure if they are right. The big brokerage firms are entrenched in the nation’s capital and they will use all their leverage to maintain their power. Some are undertaking serious efforts to upgrade the experience of their clients.

But online financial planning services are certain to emerge as serious players. Many have lined up venture capital backers and are hiring internal financial planners. Their course remains uncharted and could change direction. As Financial Engines discovered after it launched as the first Web-based planning service in the late 1990s, the 401(k) market proved far more receptive to its platform than the individual market.

Advisors on the leading edge are not waiting to let the future determine their destiny. On the contrary, they are making their destiny the future.

In this month’s cover story on page 58, Ben Mattlin profiles Peter Mallouk’s Creative Planning, a Leawood, Kan.-based firm that probably has better growth numbers than a lot of VC-backed companies in Silicon Valley. In 10 years, the firm’s assets under management have spiraled from $30 million to $10 billion.

Mallouk started out as an estate-planning attorney in the 1990s and tells Mattlin he would often spend his days going to client meetings from one wirehouse office to another. By 2004, he developed his own ideas of how to build a better mousetrap and launched Creative Planning.

According to informed industry observers, the firm has also made better use of custodians’ referral networks than any other RIA in the nation.

TD Ameritrade and Schwab are its two primary referral sources, but it has relationships with Fidelity, Scottrade and others as well.

The agreements require Creative Planning to share 25% of its fees with the custodian who refers clients. That may well turn into one business model of the future.

Evan Simonoff, Editor-in-Chief
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