Brent Hicks has created a business model that others want to adopt.

    Brent Hicks is getting his share of attention these days on subjects like Virtual Ensembles, "Hitting The Wall," and why traditional advisory firms don't work all that well. If you haven't heard the story, here it is briefly.   
    In 1982, Hicks discovered the financial services industry and started a traditional, commission-based financial planning firm with a few other advisors. He did that until 1989, when he sold his interest to his partners. Having next formed the H Group to become fee-based, he caught the eye of other Portland, Ore., advisors wanting to know how he did it and whether he wanted company.
    "I didn't set out to work with other advisors," says Hicks, "but I said I'd manage assets and do the back office for them, as long as they stayed out of my way." As the H Group grew into more than a few advisors, Hicks saw he had the engine to create enormous scale if he wanted to, so he spun off FocusPoint Solutions ( in 2002.
    The difference? The H Group puts its advisors under the same roof; FocusPoint allows advisors to remain independent and work virtually. "We decided we could offer H Group-type services to other advisors who already had their own, independent RIAs." By contrast, H Group advisors work under the H Group's RIA.
    Although the H Group (still operating with 15 advisory affiliates and $400 million under management) is yesterday's business model, it's the successful foundation on which FocusPoint was conceived. It's also a succession planning solution. The H Group recently bought out one of its advisors-Dennis Doht ( to a "standby purchase agreement" the company worked out years ago with all its members.
    The leap from an H Group to a FocusPoint business model is mostly a matter of adopting FocusPoint's Virtual Ensemble approach (see sidebar). Essentially, what Hicks promises is a turnkey back-office arrangement that lets FocusPoint affiliates become better businesspeople and use their new-found efficiency to lead more relaxed and happier lives. "Many advisors hit 'The Wall," when they burn out and leave the industry, unless they figure out how to recast their jobs to include those activities they really enjoy and excel at. FocusPoint helps them do that."
    How FocusPoint does it is the real subject of this article. For many advisors, the starting point isn't just having FocusPoint take over their back-office; it's making wholesale changes to their business plan. "We bring a coaching/consulting/mentoring process to the table. When we start working with an advisor, we take him through a lengthy process of analyzing his business to figure out where he is and how much new efficiency we can help him create with FocusPoint's services."
    For many new FocusPoint advisors, this is a huge transitional step-one in which FocusPoint dramatically reduces the complexity of their entire business. "We change how they think about and operate their business so they become much better business people. It's one of the greatest 'value adds' we offer."
    For some, the transition is also one of commissions to fees, but what kind of fees? "Fee-based" means so many different things, admits Hicks. "If they say they're 'fee-based' when they come to us, that generally means some of their business is fee-based. It might mean they do C shares, or they may do SMAs as well as commission business. Having these multiple systems is their greatest source of inefficiency." FocusPoint adds value by helping its new advisors clean up their act and become wholly fee-based.
    Once that's accomplished, the advisor settles into FocusPoint's system, which begins with portfolio management. "They no longer have to do their own research," says Hicks. "We have two CFAs on staff who do that for our advisors." That doesn't mean FocusPoint performs a discretionary investment management service, but what it does isn't too far from it, either. "We do the research, we help the advisor build model portfolios and we recommend changes to those portfolios, but we don't make the changes until they respond to our e-mailed recommendations with their approval."
    That's important, says Hicks, because it makes FocusPoint accountable to keep its advisors informed and give them the option to say no-an option they rarely exercise. "We do everything having to do with trading, but we're invisible." The advisor's clients never need to know of FocusPoint's existence.

    Portfolio reporting is greatly simplified by FocusPoint: there is none. "Our advisors have access to all their reports at any time via the Internet, but we counsel them not to send out quarterly reports to their clients because we believe that positions them as money managers instead of as advisors." Nevertheless, should the advisor want to run all his reports for himself or his clients, FocusPoint provides an efficient, Web-based means of doing that.
    Additionally, it provides the advisor with a paperless office. "The advisor can scan everything from his office onto our servers and then have remote access to his documents from anywhere." FocusPoint also provides compliance guidance, another service that sprang from the H Group. "We had to do a compliance procedure manual for the H Group, so we took that manual and gave it to FocusPoint's advisors since their relationship to FocusPoint is much like that of advisors with the H Group." Hicks is quick to point out that advisors get compliance "guidance," not full-blown "support," a level of responsibility he doesn't want for FocusPoint.
    At one time, the H Group did provide a different kind of support, however-financial plan preparation. "What we found was that financial planning is so labor-intensive, there was no efficient way to provide that kind of support to our advisors." So now one of the H Group advisors operates a side business writing plans for other advisors. "He's very good and will do it on either a retainer or project basis. H Group and FocusPoint advisors occasionally go to him with very complex estate planning cases and use him for his specialized knowledge." Otherwise, FocusPoint advisors prefer to do their own planning, says Hicks.
    The last service FocusPoint provides en masse is public relations. As a client of Marie Swift's Impact Communications (, FocusPoint can provide marketing services to its advisors on a discounted basis.
All of this may be a bit abstract until one takes a closer look at a few happy customers. One such advisor is Christopher Becks of Strategic Financial Consultants Inc. ( in Longwood, Fla. "Chris was with a broker-dealer that was making his life complicated as he tried to do fee-based work. We helped him develop a business plan and transition to a fee-only practice in about 60 days," says Hicks.
    Becks concurs, saying, "FocusPoint helped me become a much more efficient advisor and business owner. I couldn't duplicate in-house what FocusPoint provides me in support. Having a trading team, investment committee and back office of this quality would cost me ten to 12 times what it does now. I'm able to compete with much larger planning firms, I spend more time with my clients, and I am able to provide them with a higher level of planning and investment expertise."
    Not all of FocusPoint's advisors are sole practitioners, like Becks. Doug McDaniel, president of EFP Inc. ( in Jackson, Miss., adopted the FocusPoint virtual ensemble business model about a year ago to wrap around his "traditional ensemble" firm.
    "From a compliance standpoint, Doug's firm-with its complicated corporate structure, its use of C shares and its 1% management service-was troubling to its broker dealer," says Hicks. "With their less-than-ideal back-office systems, they were having trouble just providing clients with performance reports. We stepped in, did our analysis and began transitioning EFP to the FocusPoint system."
    "Since converting my practice to fee-only with FocusPoint, I've found the energy and the capacity to grow my practice," says McDaniel. "Since July of 2004, when we began our conversion, we've seen revenues increase by over 50% as a result of charging appropriate fees and having time to prospect due to portfolio management being outsourced. No question I made the right decision." 
    And McDaniel's broker dealer is thrilled, adds Hicks.

David J. Drucker, M.B.A., CFP, an independent financial advisor since 1981, now writes, speaks and consults with other advisors as president of Drucker Knowledge Systems. Learn more about him at or