Financial Advisors Vs. Entrepreneurs

September 16th, 2019

Independent financial advisors are often called entrepreneurs. It is because their personalities are suited to “going it alone.” Many of these financial advisors decide to become RIAs (Registered Investment Advisers) to provide investment advice as their fiduciary duty to clients the way they know is best. As entrepreneurs, they also want to enjoy the freedom and the opportunity to create the future they imagine for themselves. Independence offers these unlimited benefits. As an RIA, you determine the shape of your business.

This will be one of your biggest assets as an RIA that your "Captive" competition does not possess--- freedom. In addition to forming plans around your client's unique circumstances, advisors should take full advantage of the freedom they possess (or may take for granted) that they can use to have a unique touch and to take full advantage of this branding opportunity. You can STAND OUT. Spend time conversing with your clients and connecting on a human level should be more of the emphasis to create a comfortable experience. Think about this: Why should this client choose you? Why should they trust your guidance in a world full of crooks?

RIAs are fiduciaries regulated under the Investment Advisers Act of 1940, independent registered investment advisers are held by law to the highest standard of responsibility to their clients, which upholds them to always act in their clients’ best interests. This encourages a unique level of personalized service not always found in investor-adviser relationships. RIAs use goals-based planning and strategies for their clients which includes automated reporting systems and efficient trading platforms, to webinars and videoconferencing, technology. These tools are changing how independent RIAs run their businesses and serve their clients. The tools give them the freedom to service their clients better which gives successful RIAs the many joys of their career.

Attention RIAs: It is important to realize that discussions about goal prioritization shouldn’t be one-time events that happen at the beginning of the relationship. As people’s lives change, their priorities evolve. Your annual check-in meetings with clients are perfect opportunities to revisit the goals that clients have established and determine if these goals should be adjusted or reprioritized. In situations where clients aren’t on track to meet some of their goals, you can discuss the potential impact of scaling back the goal or adjusting the required confidence level.

Your ability to help clients articulate and understand their goals is central to your value as a financial advisor. But if you only focus on amount, time horizon and risk tolerance, you are getting an incomplete picture of what your clients are looking to accomplish. By helping your clients prioritize their goals, it opens up new opportunities for you to better serve your clients — and a way for those clients to view your value in a new light. Of course, the process takes a lot of work. Here are a few of the steps that must be done: 1. Creating the legal RIA entity. 2. Going through the compliance registration process. 3. Establishing your business bank and credit card accounts. 4. Getting a logo and business cards. 5. Setting up your initial technology platform (from a web domain and email provider. 6. CRM and portfolio performance reporting tools. 7. Choosing your initial vendors from your RIA custodian. 8. Choosing your office space!

RIAs forge deep, personal relationships and have a strong sense of accountability to their clients. Here are the key benefits of working with an RIA:

  1. They are not tied to any particular family of funds or investment products. So whether you need help with retirement planning, tax situations, estate planning, RIAs have the freedom to choose from a wide range of investment options in order to tailor their advice based on what’s best for you.
  2. They must build a strong understanding of your situation, and build strong relationships with clients. They hold themselves personally accountable to them.
  3. Their fee structure is simple and transparent and based on a percentage of assets managed.
  4. RIAs have a high level of expertise to support your complex financial and investment needs.
  5. Your money is held by an independent custodian, not the RIA’s firm. It creates a system of “checks and balances.”

While 41% of top RIA firm executives consider hiring and developing talent to be their biggest challenge, wringing more value from their large technology budget is viewed as the biggest business challenge by 37% of the executives, according to a poll taken by BNY Mellon's Pershing at its recent 2019 Elite Advisor Summit.

Just remember that every phase of this process from hiring key talent to integrating technology all plays a crucial role in branding. Holistic integration of all components into ONE customer experience supports the firm’s identity. You are special in this industry and the power is in your hands. You have a responsibility to stand apart from the moral obligations because you also represent freedom in the financial services industry at large. Do not be reluctant to “form fit” your business. Move outside of the box and consider innovation as a viable and realistic option moving forward.