10 ways that a new Schwab study demonstrates a nation of willing breakaways behind brokerage curtain

THE BROKERAGE INDUSTRY’S ACHILLES HEAL

The development of more mature RIA firms that (1) provide scale not possible in individual practices and (2) also afford a far superior advisor value proposition than is possible in a brokerage format, make the decision to leave a major brokerage firm easy. There is no problem in explaining the benefit of the advisor acting in the client’s best interest. These next generation RIAs, with tangible quantifiable advisory services support (process, technology, functional division of labor, statutory documentation, conflict of interest management and advisory services support by market segment) that does not exist in a brokerage format, will accelerate this dispora of brokers to advisory services.

The only difference in observation is, I am seeing advisors within brokerage firms with a half billion or more in assets are more interested in the RIA model than the average broker who has built their business primarily around transactions. They view the RIA model as being essential to their ability to continue to grow their business and to gain better control of their value proposition and portfolio construction. This is not possible within a brokerage firm because of the brokerage industry’s product focus, leaving a gaping leadership vacuum for prudent process, assistance in portfolio construction and advisory services support.

Client’s get it, but some how our largest brokerage firms have no conception of what is required to make continuous comprehensive counsel safe and easy to execute. In fact it is heresy to even put the necessary innovation on the table because it is disruptive in nature, thus the achilles heal of the brokerage industry that Barnaby Grist so abily sees.

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