Top five growing concerns for advisers in 2015

Financial advisers serious about growing their businesses in 2015 seem to be voicing similar concerns in our discussions.

Dec 18, 2014 @ 10:12 am

By Tom Daley

Financial advisers serious about growing their businesses in 2015 seem to be voicing similar concerns in our discussions.

The good news: Advisers see plenty of opportunities for growth.

The concerns: Uncertainty surrounding broker-dealer consolidations, the possibility of increased regulation and the mixed blessing of multiple business models to choose from are sources of hesitation.

The unprecedented broker-dealer consolidation perpetuates universal uncertainty in the minds of financial advisers. Now, more than ever, advisers considering a move have more questions than answers on the health of prospective broker-dealers and regional offerings.

Firms should expect to have answers to tough questions if they hope to recruit advisers. What does a recent buyout or merger mean for my day-to-day operations? Will it affect the level of service? What about payouts and expenses? For firms who haven't been part of this buyout blitz, are they ripe for one?

Solo practices seem risky; moving horizontally makes the most sense for the majority of independent financial advisers. Rather than setting up solo practices, the trend for advisers to tuck into existing broker-dealers, RIAs or branches will continue in 2015. Advisers often worry the distractions of setting up a solo practice will hinder short-term growth.

The set infrastructure, economies of scale and built-in back-up support in ensemble practices are attractive to advisers looking for independence but not necessarily the burden of building a business from the ground up. In response, we expect firms to continue to present plenty of tuck-in choices for transitioning advisers.

The lack of financial advisory businesses for sale will continue to frustrate growing advisers. Advisers tell us they are looking for books of businesses to buy in an effort to grow their practices. We don't blame them. It's a win-win scenario for the growing advisory as well as their retiring counterpart. The current reality is there just are not that many businesses for sale and we don't see this changing anytime soon.

An advisory current broker-dealer, custodian or clearing firm will be the best resource for connecting with those premium practices for sale and aligned with your business philosophies.

Rumors of increased regulation, particularly in the RIA-hybrid arena, give advisers pause. Financial advisers understand that keeping up with the latest changes in regulations is a moving target—at best. The rumors of sweeping change in the RIA-hybrid realm have been a hot topic as of late.

In general, it seems the burden would fall to the broker-dealers to provide more oversight. So far, this added level compliance doesn't seem to be a deal-breaker for advisers attracted to the flexibility and growth potential this business model offers. However, firms should be prepared to address the concerns with advisers in transition.

Financial advisers are taking a good hard look at their practices to identify gaps and potential areas of efficiencies. Once advisers identify areas for potential growth, they are reaching out to their current broker-dealers, custodians and clearing firms for support and resources in their efforts to expand.

When advisers don't feel like they are getting the support they need, they start to consider a change of affiliation. Financial advisers understand it's one thing to want to grow and another to have the key components in place to support sustainable growth.

Tom Daley is the founder and CEO of The Advisor Center, a strategic partner to InvestmentNews.


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