Don’t just throw more people at the problem
Advisory firms that are expanding often focus on hiring more people, but Matt Matrisian of AssetMark argues that they should also be assessing their systems and processes to deal with issues of scale and efficiency.
Matt Matrisian: Yeah, so as advisers think about going independent, they really need to think about all aspects of owning a business and managing a business appropriately. So everything from business management issues to human capital to operational efficiencies and processes to marketing and branding, all of those components kind of come into play when they’re thinking about running their business. Advisory firms have grown a lot over the last few years, and I think the biggest challenge that I hear when I talk to advisers is the need for human capital. And it’s not just an advisory issue. It’s more of a macro industry issue that they’re really challenged by finding people, hiring the right talent, what to compensate those individuals. And so for advisers, it’s not just around human capital. But I would actually argue it’s more around scale and efficiency within their business. Oftentimes, advisers look to fill the issue around scale and efficiency with hiring more people. But I think they need to take a deeper look at their business and build out systems and processes and everything else to be able to help them scale. One of the big industry issues today is fee compression, and that’s going on across the board, I think from an advisor’s perspective, as they think about fee compression, it really ties back to their value proposition. To the extent that they have a strong value proposition and strong service model, they’re going to be able to continue to deliver value to their clients and ultimately help support the fee structure that they’re historically used to. At AssetMark, we’ve really tried to look across all of the services and and strategies that were able to deliver and really kind of push down the fees offering ETFs and institutional funds and the like to be able to create the lowest cost alternatives in the marketplace, to be able to support advisors and then need to be able to drive down fees the client.
