He says most of his clients found him on the Internet, and that only about half of the 40 clients he’s worked with—a mix of hourly planning and retainer fees—live in either Wisconsin or Montana.
“I truly believe the game changers won’t be advisors, it’ll be the tech folks,” Moore says. “I believe we’re in a time of reshaping the industry in a way that’s never been done before thanks to technology.”
No Bullying
Much has been said about the rise of the advice-centric RIA model at the expense of the product-centric wirehouse model. Look for that trend to continue, but don’t expect the wirehouses to become ancient relics in 20 years.
“I think the philosophical question is whether the business is changing,” Tibergien says. “There clearly will be a shift toward a more fiduciary advisory model versus the professional sales model.”
But, he adds, “Anyone who predicts the demise of the wirehouse model is engaging in wishful thinking. These are large, sophisticated retail financial organizations, and while they might change hands, their existence will be real.”
Within the RIA space, Tibergien expects the rise of the large independent, multi-shareholder, multi-employee advisory firms to continue. And, as it does, the RIA channel will likely become more like the accounting and legal professions where there’s a delineation among large national or global enterprises, regional firms and local businesses.
Chip Roame, managing partner at Tiburon Strategic Advisors, says technology advances, coupled with platforms from the likes of Morningstar and Envestnet, will “help guarantee that small firms will continue to thrive and not be bullied out of business.”
“RIAs will continue to take share, both in growing their businesses and adding breakaway brokers to their market,” he says. “The wirehouses won’t die but will focus on fewer, larger producers who will increasingly look like independent contractors with their own brands, offices, etc. The independent broker-dealers will find themselves caught in the middle, will consolidate further and will evolve to look more like custodians and/or producer groups.”
Gazing further into his crystal ball, Roame posits that discount brokers will outgrow the wirehouses and maybe even outgrow the RIAs, at least in their number of accounts.
“Discount brokers and their advice offers are the right model for the next generation,” he says, pointing to Schwab’s Independent Branch Operator strategy and Fidelity Strategic Advisor as examples.