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Erinn Ford interview: What sets Horizon apart from the way other offices are run?

Recently, Erinn Ford, President of Cetera Advisors, LLC gave her thoughts on Horizon Wealth Management and the Horizon Advisor Network. Here she talks about...
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TO NETWORK OR NOT TO NETWORK…GOOD QUESTION

  As the former VP of Business Development for a small/medium sized broker-dealer, I worked with advisors contemplating this question all the time. Do...
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Is the Ritz Carlton worried about the Motel 6 next door? Then why are you concerned about Robo’s?

“We’ll leave the light on for you.” Not quite the tagline you build a customer service book around, and it’s in sharp contrast to...

TO NETWORK OR NOT TO NETWORK…GOOD QUESTION

 

As the former VP of Business Development for a small/medium sized broker-dealer, I worked with advisors contemplating this question all the time.

Do I join a broker-dealer home office directly and take advantage of a potentially higher payout without a middle man or do I “hitch my wagon” to a well-established OSJ/Branch network (network) and take advantage of the resources and scale my new network may provide?

As you could imagine in my role at this firm I had my answer down pat – “eliminate the middle man,” “let us do the supervision and let us pay for it,” “we provide all the practice management tools, technology and training you could want.”

Those are all very rational arguments built on solid industry data, but may not be true for everyone. In the words of Lee Corso, “not so fast!” I forgot to mention one minor detail – we didn’t have a network option! All our advisors were affiliated directly and were supervised by our home office supervision team…but I digress.

I am now three years removed from that role. Through the consolidation we are all accustomed to in our industry, I have seen many different affiliation models. I can honestly say no longer does one size fit all.

As our industry continues to evolve and mature the one thing that still holds true is the greatest thing about being an independent advisor is choice, while the hardest thing about being an independent advisor is, you guessed it, choice.

The choice to join a network or go directly to the home office many times comes down to payout (or said another way “show me the money!”). While it is true the independent broker-dealer space, whether home office affiliated or network affiliated, has been forced to compete heavily on price it cannot be the only consideration. Believe me payout is very important, but it should not be the primary factor in making your final decision as in many other cases in life.

Let’s look at six factors I feel are equally important in evaluating your affiliation decision:

1. INTELLECTUAL CAPITAL

In today’s market place advisors must focus on differentiating themselves. Whether through blogging, writing articles for publishing in the media, or unique client and prospecting events, you must develop unique processes and framework to standout. Top networks make it a priority to provide intellectual capital they have developed over many years to their affiliated offices.

What to Ask: Have you made the effort to hire a dedicated resource focused on building out platforms and services that I can replicate?

2. COMPLIANCE AND SUPERVISION SUPPORT

Most broker-dealer’s compliance and supervision teams are top notch and provide top level support to their affiliated advisors. With that said they provide this support typically from a far and to a vast number of advisors. There are major benefits in having a dedicated network compliance support team available. Benefits can include faster front-end review and processing

time, focused time and effort clarifying rule changes and a dedicated expert able to navigate the ever changing compliance and supervision systems of the broker-dealer.

What to Ask: Have you hired staff members focused on supporting the ever changing regulatory environment that have the ability to process paperwork in a timely manner as well as help me with complex situations?

3. OPERATIONS SUPPORT

On average for every $1 of expense in your business over $.70 goes to staffing. Labor, while your largest investment as a successful advisor, provides you some of your greatest returns. Again, most broker-dealers have good operational support. As with compliance, network level operations support is about leverage. Navigating a complex operations department can sometimes be daunting. Networks, depending on your affiliation with them, can provide a) support and training for your current and future staff to help them better navigate your broker-dealer, or b) can provide an operational team that can help you focus on your unique ability of creating and strengthening client relationships.

What to Ask: Have you developed an operational work flow and team that at the end of the day, can get my business processed faster than I could on my own? Do you provide different affiliation models that allow me to choose greater support?

4. PRACTICE MANAGEMENT SUPPORT

If I had a nickel for every time someone used the word practice management in our industry, I’d have a lot of nickels. Since I haven’t found a way to those royalties yet, let me share some differences in practice management offerings. While some broker-dealers provide insight into what other successful financial advisors are doing and give you tools and tips to help you grow your practice, there are some true innovative networks out there doing more. They are the ones that can truly assess where there are opportunities to streamline your operation and provide strategies for building your unique company. Most of us wake up every day managing the largest company we have ever managed in our careers; successful networks can help coach us along the way. Find the networks that have spent the money and time creating a practice management infrastructure. Why recreate the preverbal wheel.

What to ask: Have you hired a team that can keep me up to date on the latest tools and solutions to help my practice grow? Are they willing to sit down and help me assess opportunities for improvement in my practice?

5. BROKER-DEALER RELATIONSHIP

We all have been coached for many years to segment our clients. Said more bluntly – those generating us the most revenue get a different suite of services than those clients who are just starting to save or may not have every investable dollar with us. The broker-dealer service to advisors is no different. Broker-dealers typically invest in those offices that can create greater growth and leverage for them. As networks continue to grow and become tighter integrated with the broker-dealer it is likely that the broker-dealer will continue to provide the members of these networks with services that may not be available to most advisors.

What to ask: How long have you been affiliated with the broker-dealer? Do you have deep rooted relationship with upper management?

6. ACQUISITION/SUCCESSION SUPPORT

The numbers don’t lie. The average age of advisors in this business is 57 years old and aging and only about 2 out of 10 having a plan for their business in the event of death, disability, or retirement. Whether you are looking to acquire the practices of some of these aging advisors or

need to get a plan in place to protect you and your loved ones in case of an emergency, support is critical. The top broker-dealers have all made good strides in addressing this topic by providing support from legal documents to acquisition funding. While this is very important and many advisors are making strides in this area you must also have “boots” on the ground. For advisors looking to acquire a practice the key to success is having a dedicated resource who is focused on finding candidates and evaluating potential opportunities. For advisors looking for a continuity or succession plan you must have support. In most cases your practice is the largest asset in your “portfolio” and as you tell you clients, you need advice.

What to ask: Do you have staff who has first handle knowledge of completing an acquisition/succession and making it successful?

These six factors along with payout will go a long way in helping you determine the right way to affiliate in the independent broker-dealer space. It will help you find the right partner in developing your firm. While we all need air, water and shelter it is those things that differentiate one from another that truly help create value for your organization.

While finding a broker-dealer or network partner may be daunting, I have seen many advisors thrive in a new environment. Remember it is not the change that we fear it is the transition to the change that keeps us from finding a potentially greater environment.

 

 

ABOUT THE AUTHOR

Chris Sullivan sm

Chris Sullivan
Branch Development Director
Horizon Wealth Management

Chris’s primary areas of focus are practice development, acquisition, and succession planning as the Branch Development Director for Horizon Wealth Management. He concentrates his efforts on helping advisors grow their business by maximizing communication with clients and peers, leveraging the benefits the firm has to offer, and staying apprised of practice management trends in the industry.

Chris began his career in the securities industry in 1999 in the sales and marketing department of a securities firm. Prior to joining Horizon Wealth Management, Chris spent nearly three years at Cetera Advisors following a six year career at Pacific West Financial Group. He uses his background as an independent financial advisor to help advisors leverage their relationship with Horizon Wealth Management to grow their practices.

To Contact Chris:
425-691-8773 | phone      Send Chris an E-Mail

 

Is the Ritz Carlton worried about the Motel 6 next door? Then why are you concerned about Robo’s?

“We’ll leave the light on for you.”

Not quite the tagline you build a customer service book around, and it’s in sharp contrast to the 5 star (maybe 6-star, depending on who you ask) service one comes to expect when ponying up the cash to stay at a Ritz Carlton.

More and more articles and chatter continue to swirl around about the delivery of financial advice through Robo Advisors.  While I agree they have been very successful in gathering assets and appealing to Millennials, I hesitate to jump on the bandwagon calling for an end to the human financial advisor.

Should we ignore this new trend? Absolutely not.  It is teaching us something about the way the next generation chooses to receive information and begin their journey of saving money.  The message is to gain access to this “YouTube” generation, give them the information on-demand and provide the technology they have become accustomed to.

But think about it in the context of the value you provide to your clients.  If you are purely a place for them to go execute trades, or are the lowest priced option on the block (the Motel 6), then yes, you should be prepared to compete head-to-head with this new competitor.  Motel 6 has several direct competitors trying to provide better free coffee and lower room rates, but I imagine Ritz Carlton is not high on their focus list of competition.

What about the advisor whose true value to clients goes well above product, price, and performance?  What about those advisors that are effectively utilizing the intellectual capital they have created to guide clients through the emotional side of investing?  What about those having discussions that get at the heart of an investor’s feelings about money? What about those spending the time and resources to help clients reach short and long-term goals?  Now, that’s going well above free coffee and slow Wi-Fi.

In a commoditized product-based business you need to stand apart.  You need to focus on your unique ability.  At times this is can be hard, especially when most conversations start like this:

Advisor: “Hi, my name is John and I am a financial advisor”.

Client: “Oh great, what do you think about these crazy markets? Should I buy Facebook? My brother says it is way overvalued, but I see it keep going up.”

You need to shift the conversation. You need to focus on your value.  If your value is helping people understand the technical aspects of the market, and you are a great money manager, that is your lead.  If you are an outlet for clients to have conversations with, where they would otherwise not know where to turn, lead with that.  If you are focused on helping address specific goals, retirement funding, college funding, etc., use that.

Flip the conversation with the client and help them with things they couldn’t get anywhere else and couldn’t replace with technology.  You are the value chain. You drive the relationship.  Open with more than “I am a Financial Advisor”.  Talk to people about how you help them organize and understand their finances.  Let them know how you lead business owners through the different phases of being a leader of an organization.  Tell them how you can help them have the conversation with an aging parent.  Explain how you can work with the other professionals in their life to make sure their “one life” has “one plan”.

With this new technology, will the story be told in a different way? Absolutely. With this new technology, will your value proposition have to be more than calling with a hot product idea? No doubt.  What it doesn’t change is that fact that most Millennials, Boomers, and Generation X,Y,and Z-ers still need someone to turn to when faced with making financial decisions.  If they don’t, they shouldn’t be paying customer of yours.

Picture yourself as a surgeon in the operating room.  The patient rolls in and sees the table full of surgical implements you have out ready to perform the procedure.  Here’s the one thing you are guaranteed to never hear from the patient: “Thanks, doc. Now that I see all the tools I need, I’ve got it from here.”

Or better yet, remember that there are people out there who understand the value of great service and access to a smart, professional staff. They are not walking down to street looking to spend the night at the cheaper option just to save a couple basis points.

 

 

ABOUT THE AUTHOR

Chris Sullivan sm

Chris Sullivan
Branch Development Director
Horizon Wealth Management

Chris’s primary areas of focus are practice development, acquisition, and succession planning as the Branch Development Director for Horizon Wealth Management. He concentrates his efforts on helping advisors grow their business by maximizing communication with clients and peers, leveraging the benefits the firm has to offer, and staying apprised of practice management trends in the industry.

Chris began his career in the securities industry in 1999 in the sales and marketing department of a securities firm. Prior to joining Horizon Wealth Management, Chris spent nearly three years at Cetera Advisors following a six year career at Pacific West Financial Group. He uses his background as an independent financial advisor to help advisors leverage their relationship with Horizon Wealth Management to grow their practices.

To Contact Chris:
425-691-8773 | phone      Send Chris an E-Mail