Over the past 10 years, independent wealth management firms have intensified their focus on driving on size and scale, with a significant and detrimental impact on personalized service standards, both for advisors and their end clients.  

What’s the causality here? Let’s start by accepting the fact that getting bigger and more efficient means introducing solutions that meet the needs of the broadest number of advisors possible.

Unfortunately for advisors, however, these solutions tend to be cookie-cutter, providing limited room for customization of services and solutions. As such, firms that opt for such an approach could be swimming against the long-term tide.

No better example of this can be found than with the current Covid-19 pandemic and its related market and economic disruptions. Financial advisors under pressure to support anxious clients facing new worries have become acutely aware that more customization—not less—is needed to help manage both current and potential future “big picture” challenges.

Home Office Revenue Grabs Could Be Red Flags
Sacrificing personalized solutions for cookie-cutter support in the name of growth for its own sake is obviously not a good thing for advisors. Worse yet, however, many of these same firms have chosen to maximize value for the home office with rapidly multiplying, additional “behind the scenes” costs charged to advisors for anything and everything.

It’s no secret that fast-changing regulatory, technology and investor behaviors have continued to drive up the cost of doing business, and that many independent firms have reacted by passing on more of their expenses to their advisors.

But there is a fine line between having a reasonable fee structure versus an extractive approach to business, the latter of which will limit how much capital advisors can retain to re-invest back into their own practices. 

Therefore, would-be transitioning advisors should ask in-house recruiters both for a detailed chart of their firm's fees and an explanation for what those fees are supposed to cover.

Firms that value advisor growth, long-term stability and retention understand that charging for anything and everything is no way to do business. If the detailed fee chart suggests revenue grabs from the home office each step of the way, that could be a huge red flag.

Quality Of Resources—Technology Platforms and Succession Loans
While providing a preset menu of technology solutions may simplify things from management's perspective, it also frequently leaves advisors with resources that are not entirely a great fit for their business needs.

Indeed, having a laundry list of resources is not the same as offering advisors the right kind of resources. That requires listening.

To that end, C-suite level executives and other senior leaders must make a habit of personally reaching out to each advisor at least once a quarter, if not more frequently. Advisors interviewing potential firms should establish up front what the cadence of touch-base discussions will be, and at what level of seniority within the firm.

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