Finding An Aligned Firm
Moving your book of business is a big deal as an advisor. It impacts every part of your life–your clients, staff, family. It’s a substantial project to put on top of your already busy life.
That’s why if you’re going through the process of transitioning your broker dealer, RIA, or OSJ, it needs to be a long-term investment. That’s becoming more challenging as the advisor industry undergoes rapid evolution.
We all know how quickly firms can change: new leadership, the entrance of private equity, rapid growth, etc.
Finding a Strategically Aligned Partner
When we work with an advisor, our goal is to find firms that align with your strategic goals. That might look like:
Long-Term Partnership: A firm able to provide you with 10-20+ years of stable support
Innovative Platform: A firm committed to investing in its platform and offering new, leading resources to its advisors.
Acquisition Support: A firm that can give you financial and operational support to perform your own acquisitions to grow your business.
Exit Planning: A firm where strong culture and compensation make them a great fit to sell your business and exit.
These are just a few examples of searches we’re working on, but each one is looking for a different kind of firm by default. The problem?
The Sales Spin vs. The Strategic Plan
The problem is that many firms will spin a clean sales pitch for an advisor, centered around what you want to hear. In many cases though, the pitch can neglect (or even hide) the strategic direction of the firm.
I’ve seen advisors join a firm looking for simple, reliable support and a long-term partnership, just to see company leadership begin dumping large investments into M&A–and not serving their advisors.
What you DON’T want is to align yourself with a firm with an incomplete or inaccurate view of their strategic priorities. What are they and do they align with your own vision for your business?
Finding an Aligned Broker Dealer, RIA, or OSJ
The questions you really need to ask are:
What does this firm’s strategic plan look like?
How would I know my answer is accurate?
Looking at some of the larger broker-dealers, the strategic plan may be more obvious and publicly known. There still can be some conflicts or some nuances, especially with how you affiliate, but it may be an easier question to answer.
When you're looking at an RIA or an OSJ or a smaller firm, question #2 is harder to answer. You don't know their incentives. I've often talked about the Mark Twain quote before, “History doesn't always repeat itself, but it sure does rhyme.”
If you’re exploring these categories, here are a few of my key questions.
How’s Their Growth Going?
It’s no secret that RIAs especially are having a harder time growing organically, leading to the surge of M&A headlines we’ve all seen. It’s why I like to ask to see data on a firm’s performance, especially year-by-year over the last 5-10 years.
Maybe 5-10 years ago, they were growing well, but then they stalled. Suddenly, M&A became a key part of their strategy. Did the quality of their service decline when they shifted their growth strategy? Or did they manage to balance the two well?
The goal is to identify both IF they are growing, and if so, HOW they are accomplishing it.
If you have your own plans to grow your business, you want to be cautious of partnering with a firm that struggles to grow on its own.
How Are They Making Their Money?
This is a question we work through at length when considering firms for our advisors. You’ve likely heard more than a few stories of advisors who had their fees raised because their RIA or OSJ needed to make up financial gaps.
Fees: This is especially important if you’re looking for a cost-efficient platform. Does a firm have a track record of raising fees?
Investing Models: Does a firm heavily incentivize using their models and make it far more expensive to use your own?
Shiny Objects: Do they make you pay for services that are rarely used or undersupported? Many firms add promises like marketing services that are more for the line item than for the value.
Acquisitions: Do they make their money by acquiring books of business? How do those funds compete with their service?
Misalignment in any of these areas might not be a deal breaker, but they absolutely create friction. The bigger challenge is changing expectations–firms may be quiet on their strategic pivots. Uncovering them is key.
Knowing the Signs and People
I don’t want to be doom and gloom about this topic. There’s an enormous opportunity for advisors to find strong firms that give them a strong future. The key is knowing what you’re looking for.
Part of this is what you might call knowing the signs–observable data points that give more clarity if you know what you’re looking for.
The problem is that most advisors aren’t sure how to get to the truth. It’s a different world than your day-to-day role in your business.
It’s invaluable to have someone advise you through this process, just like how you advise your clients.
The other part that’s worth mentioning: knowing the players is critical. By and large, most first have access to the same platforms, custodians, and technology. The biggest difference lies in the leadership and culture of a firm. What are their priorities? What kind of people are they?
This is one of the key areas we help advisors. We swim in this ocean all day every day, and I’ve gotten to know many leadership teams personally. Others, I’ve gotten the general consensus from advisors who have joined and left their firms.
What I’m trying to say is this: finding a better firm doesn’t need to feel like guesswork.
We are here to help remove your unknowns, accelerate your search, and help you find the firm that gives you the best future.
We know the players. We know the questions. We’re here to help you grasp what might otherwise take years to learn.
If you’re in the process of considering a transition, grab a time on my calendar. It’s fully confidential, and we can discuss what you’re looking for and where to find it. Take your next confident step towards designing the future of your business.
