Are advisors operating ‘above or below the line’?

If advisors want to continue to stay relevant and continue to have a fresh value proposition that their clients appreciate, it’ll be crucial for them to be open, curious and understanding.

That’s the message Gerald Goldberg, CEO and co-founder of GYL Financial Synergies, wants to convey to advisors. He says RIAs and IBDs alike should be “the consummate student, in terms of what the industry players are providing.”

“Think about it from the vantage point of a client, ‘What are my needs? How are they being met by the vendors, the relationships and the advisors that I have in my life? Are they ticking all the boxes? Or are there places where there could be improvement?” Goldberg says.

To help with this, Goldberg credits a book he’s reading called The 15 Commitments of Conscious Leadership that ultimately asks “Are you operating above the line? Or are you operating below the line?”

“If you’re operating below the line, you are closed to new ideas, you are defensive, and you are committed to being right. If you’re operating above the line, you’re open to new ideas, you’re curious, and you are committed to learning and to expanding your mind to take on new ideas and new information,” Goldberg highlighted.

Indeed, RIAs who are committed to taking on new ideas and information should be investing in financial technology. It has not only helped advisors go independent over the last several years, but also made going independent possible in the first place. Goldberg noted as fintech became more prominent, it reduced barriers to the independent space that previously existed.

“As we saw advances in fintech and being able to create a tech stack to create a business, you saw this massive change, almost the democratization of this space,” Goldberg says. “That was something that was in full bloom back in 2016, and it has continued, if not accelerated, in terms of being able to really empower those who are in this space and being able to take care of clients’ needs.”

That said, however, Goldberg says there’s always a constant and that constant is change. Accordingly, he suggests advisors should always be looking at their value proposition and how they’re enhancing their clients’ experiences.

For those firms who are solely resting on thinking they already do a great job managing money for clients, he respectfully submits that “they’re missing the boat.”

“Those are table stakes,” he says. “I won’t say that it’s become a commodity, [but] everybody comes with their own unique perspective. For us, we call balls and strikes. There are pros and cons associated with every investment modality that’s out there. We tailor our approach towards the specific clients that we’re taking care of and we unpack that with clients in a fiduciary-centric way.”

Another thing Goldberg describes as “table stakes” is comprehensive financial planning as “it goes beyond doing the basic retirement planning and education,” he notes. “It’s working very closely and collaboratively with their trust and estate attorneys, with their accountants, in terms of tax efficiency and really digging into those areas in a very granular way.”

What has helped Goldberg and GYL’s growth is incorporating not just active and passive strategies, but direct indexing strategies because direct indexing helps them to make “portfolios that much more tax efficient.”

“You can use tax alpha that’s being generated in the direct indexing area,” he noted. “Not only the returns that they’re achieving within that segment, but in other aspects of their portfolio where they’re getting a lot of gains that have been realized. That could be something that was within their control or outside their control.”

As for alternative investments, Goldberg thinks there is an increasing appreciation for the potential value the inclusion of those asset classes can provide to clients, although, he says it depends on the segment because there’s a lot to consider.

“Everybody talks a good game battle for alternatives but when you unpack that … we have to have the subscription agreements and they need to be reviewed by the clients. If they want to end up having their legal counsel, then they have to be signed. Then, there’s going to be capital calls and K-1s and capital statements… Where’s that going to reside?

“There’s a lot to it. It’s not rocket science, but these are things that that need to be thoughtfully prepared for and ramped up for,” Goldberg said.

Name: Gerald B. Goldberg
Position: CEO and co-founder
Company: GYL Synergies
Founded: 2016
AUM: $6.3 billion

Related Topics: RIAs, Tax