Execs Debate The B-D Of The Future

What does the broker-dealer of the future look like? Examine what the wealth management firms of the future will look like and that will provide some clues.

This was the topic of the day at the Financial Services Institute’s CEO session at its annual OneVoice conference in Dallas on January 30. The participants, Cetera Financial Group CEO Robert Moore, Commonwealth Financial managing principal John Rooney and Kestra Financial CEO James Poer, acknowledged their businesses are changing at a fast pace.

Providing transaction and execution services was yesterday’s game. “The first paradigm shift was from commissions to asset management,” Rooney said. “Today, we’re moving from asset management to wealth management.”

Some advisors may resist this but it’s “going to happen,” he continued. The role of a B-D today is providing the tools to do holistic planning. The upside is that this aspect of the business is far less vulnerable to competition from automated “robo” models than asset management is.

“Demographics, technology and clients’ needs are converging,” Moore observed. It’s no longer about asset management. He mentioned attending the funerals where advisors spoke and neither they nor their clients’ families ever discussed beating the Standard & Poor’s 500.

B-D’s need to create advice-centric solutions centering on better use of client information via discovery methods and technology. Clients will pay “every bit of what they pay today,” Moore argued, but advisors will need to offer expanded services.

Along those lines, he expects to see more concierge services. When it comes to compensation, Moore thinks there will be a shift toward retainers and pure advisory fees.

The business is moving in a direction where B-Ds, not just advisors, will be held “far more responsible” for how the client experience is delivered, Kestra’s Poer said. “If you aren’t executing a tech-focused, service-oriented, client-driven strategy, you are behind,” he warned.

Another challenge is that the demand for advice is soaring while the supply of new advisors is not. The industry needs “25,000 new advisors to make up” for projected attrition in the next few years and they “should all be women to compensate” for the gender imbalance, Moore declared.