Advisers: Is the grass really greener?

At one point or another most advisers wonder if the grass is greener—or the gross is greater—at other firms.
MAY 29, 2013
By  Tom Daley
At one point or another most advisers wonder if the grass is greener—or the gross is greater—at other firms. As a financial adviser, whether an employee or independent, at the end of the day the revenue generated is essentially the adviser's “revenue”. The main question is how the revenue stream is reinvested. To find the answer, start with the math.

The Simple Equation

If an annual gross revenue of $1 million is generated as an employee, the firm determines how to allocate the majority of the revenue. For simplicity, assume the adviser nets $400,000-$450,000 in personal compensation. The key variable is where is the remaining $550,000-$600,000 going? Is it being reinvested in ways to help service clients and grow the adviser's practice? Many firms wisely and judiciously re-allocate revenue into areas designed to support advisers who want to continually grow their businesses. However, some firms have advisers voicing concern over paying more in expenses but operating with considerably less sales support today than what was provided in the past. Analyzing the financials, specifically payouts and expenses, as well as services and capabilities helps determine whether an opportunity with a different affiliation will foster growth and maximize margins.

4 Key Expenses and Re-Allocations to Consider

Technology—Does the firm provide excellence in technology and embrace a philosophy of continual innovation? From email to databases to operations, ideally the technology is seamless and easy to use with an integrated technology platform. Automated time-consuming processes—account opening and management, document imaging, transaction execution and account re-balancing improve efficiency and accuracy so the adviser can focus on growing. • Compliance—Does the current affiliation provide flexible and responsive compliance? In the ever-evolving regulatory environment, keeping on top of diverse and complex compliance requirements is a challenge. Integrating and automating compliance procedures, allows the adviser to focus on servicing current clients and prospecting for new, rather than on logistics. • Marketing Support—Do existing marketing strategies attract fruitful relationships and differentiate the adviser in a busy marketplace? Marketing focused intently on business growth employs good prospecting practices and a full range of expert communications. The more tools at an adviser's fingertips the better—from customizable, logo-ready brochures to letters and seminar invitations. • Responsive Customer Service—Does a dedicated, committed customer service team provide back-office service and support? Having enough staff in place to immediately answer any questions and provide customer service is vital to continued growth. From assistance with technology to answering questions on products, an accessible, knowledgeable customer service team enables the adviser to focus time and energy on clients. Knowing the real cost of doing business may indicate it's time to make a change or it may reassure an adviser the grass isn't greener elsewhere. Either way, it's important to have the numbers—and the answers—in hand. Tom Daley, is the Founder and CEO of The Advisor Center, a comprehensive online community where financial advisers can objectively—as well as anonymously—research broker-dealers, RIA custodians, RIAs and branches.

Latest News

eMoney supports focused financial planning with enhanced needs analysis
eMoney supports focused financial planning with enhanced needs analysis

The Fidelity-owned fintech aims to help advisors connect with mass market and mass affluent prospects with single-goal conversations.

Trump SEC pick Paul Atkins grilled by Democrats in early political test
Trump SEC pick Paul Atkins grilled by Democrats in early political test

The prospective chair of the agency has pledged to shed conflicted interests and "return common sense to the SEC."

Finra moves to boot Alpine Securities, same firm that claims the regulator can’t
Finra moves to boot Alpine Securities, same firm that claims the regulator can’t

'If I were on the side of Alpine Securities, I’d put all my eggs in the federal court,' one attorney said.

CFP Board floats new procedural rules around bankruptcy, misdemeanors
CFP Board floats new procedural rules around bankruptcy, misdemeanors

If approved, the proposed revisions would achieve outcomes similar to the existing process while reducing the burden of oversight.

What pre-retirees don't know about Social Security could be hurting them, says T. Rowe Price
What pre-retirees don't know about Social Security could be hurting them, says T. Rowe Price

Survey research reveals gaps in retirement savers' knowledge, pessimism around receiving benefits, and a lack of good options to solve looming solvency crisis.

SPONSORED Retirement plan balances are flourishing. Why are so many advisors missing out on a $3 trillion opportunity?

Participants who receive professional 401(k) advice see higher returns on average, net, than those who don't.

SPONSORED Focus on clients, not compliance – why Gary Corderman found his fit with Farther

This wealth management platform finally delivers on the technology promises other firms couldn't - giving advisors a better way to scale and serve