Enthusiasm simmers in the wake of the by-invite-only Barron's Top 100 conference
The purity of the all-independent crowd was palpable, powerful for attendees
Brooke’s Note: A friend of mine recently moved from Sausalito, Calif., to Los Angeles because she saw greater diversity, culture, job opportunities and energy. But Sharon is already planning to move back because of a factor she had not foreseen as being all that important. She can’t locate any downtown in la-la land. Within 10 miles of her former home were the downtowns of Mill Valley, Tiburon, Larkspur and San Anselmo. These are places you can have a mocha and feel like you have reached the heart of a community — albeit a more homogeneous one. I thought of how important that sense of community is as I wrote this article about why RIAs and RIA custody executives are so effusive about a conference that happened a little over a week ago in Orlando.
RIAs have a plethora of great industry conferences to choose from each year, hosted by custodians like TD Ameritrade Institutional and Schwab Advisor Services — or by organizations like IMCA, NAPFA and the FPA.
But while events these groups hold around the United States address a variety of needs for these advisors, their common denominator is the service the groups provide and not the advisors themselves.
It’s because the Barron’s Top 100 Independent Advisors conference did focus on advisors and the sense of solidarity among them that several RIA leaders and advisors are already giving raves to the freshly-hatched event held April 14-16 in Orlando’s Ritz-Carlton.
RIAs become an industry
Bernie Clark, executive vice president and head of Schwab Advisor Services, says that the elite event demonstrated to him the degree to which the RIA business has begun to coalesce.
“This really has become an industry,” he says. “It was akin to me to going to a big SIA conference to the wirehouses. Everything’s there. It’s neat to have that experience.
“This is the one conference that is pure independent advisor and it’s smaller” than most national events, says Tom Bradley, president of TD Ameritrade Institutional.
There were 73 of the top 100 Barron’s independent advisors in attendance and other advisors that swelled attendance to a few hundred. Advisors who are chosen in previous years are permitted to attend the event in addition to current honorees.
Independence was a theme and a bond at the Barron’s conference, according to Bob Collins, principal of Collins Investment Group. He previously attended conferences held by Barron’s but aimed at wirehouse advisors.
“There such a difference between the wirehouse one a year ago and this one,”’ he says. “It was definitely calmer. There isn’t a lot of chest pounding. We all know we’re business owners.”
Mike Durbin, who heads up Fidelity Institutional Wealth Services, said the conference was “doing its part to provide an identity to the industry and there was a lot of positive buzz on that score.”
If there’s a downside to the event, it’s that advisors can only attend if they’re invited. One important factor is having a large amount of assets under management but there are other qualitative factors. For more insight, read: The top 10 things you need to know about the new Barron’s Top 100 list and Barron’s offers insight but declines interview about Top 100 study
Advisors who get the Barron’s nod need to pay their own way to Orlando and pick up the cost of the Ritz-Carlton rooms, but it was worth it for Collins, who recently broke away to Wells Fargo’s Finet program. for more details on his breakaway, see: Wells Fargo emerges as independent channel competitor
“I’m willing to pay to do this,” he says. “It’s the cream of the crop, and I took away some ideas. It confirmed that I’m doing everything right” in running an independent business.
The three major custodians were all sponsors of the conference, and the leader of each gave speeches. A laser focus on feasting on wirehouse assets created solidarity in Orlando – even among fierce custodial competitors, according to Bradley.
Big pot of gold
“The bottom line is that most of the business comes from the wirehouses,” he says. “The big pot of gold is the wirehouses.”
Yet for all of its celebratory qualities, the conference also underscored to Durbin just how stiff the challenges remain to get the RIA industry over the hump. “I absolutely ascribe to the shift [to an advisory world dominated by independents] but it’s not going to be easy.”
Durbin hints at a new program at Fidelity for stimulating the movement of assets from wirehouses to independent advisors. The plan is to take all the knowledge of how wirehouses compete accumulated at Fidelity’s corporate level – in the name of recruiting breakaway brokers — and confer it on RIAs. Armed with this intelligence, Durbin believes that RIAs will be more successful in luring assets away from them at the client level. That knowledge can include information about trading, reporting, pricing and website functionality.
Clark adds that he believes that Cerulli’s assertion that the size of the independent business will approach the size of the full service business by the end of 2012 looks well within grasp.
Trend is slowing?
“People like Sallie Krawcheck get to say this [trend to independence] is slowing,” he says. “It’s not within her sights.”
With such a big target drawn on its back, the wirehouses may still have one more can’t-beat’em-so-join’em card to play in competing with independent advisors, Clark says.
“In 2015, the wirehouses are going to declare themselves independent,” he says.
TD Ameritrade's board suddenly pushes out Tim Hockey after his big misread of RIAs; Tom Bradley name-dropped as successor
The CEO broke the TD promise never to compete with RIAs, took it back and got sent packing
July 23, 2019 – 4:30 AM
Fidelity Investments loses Kathleen Murphy who largely caught up Fido to Schwab (near $4T) on the retail side by reversing net promoter scores
The 'no whining allowed' leader of the Boston giant's retail business, who oversaw $2 trillion in net new assets, was ready to exit but hung in through a year dominated by COVID-19 challenges
January 23, 2021 – 2:02 AM
Fidelity Institutional looks like a big TAMP after Mike Durbin removes last internal walls between products and advisors after 'meteoric' 2019 leap; two Fido RIA sales legends depart amid the shift
Rich Policastro and Tom Valverde are out after Fidelity Custody & Clearing assets leap to $2.6 trillion AUA, restructuring gets the credit -- and so restructuring gets extended.
March 13, 2020 – 10:36 PM
Fidelity, others pounce on TD RIAs with a vengeance following Schwab merger, but Schwab finds a white knight to defend its new Texas fort, and, suddenly, Tom Nally's future seems clouded at 'Schwabitrade'
Former TD Ameritrade RIA chief and retail chief Tom Bradley will assist Bernie Clark in instilling trust and applying 'modern' service to the under$100-million crowd during an age of anxiety at both firms
December 10, 2019 – 2:05 AM
See more related moves
Top Executive: Tom Nally
THE INDEPENDENT BROKER BUSINESS MODEL SHOULD NOT BE CONFUSED WITH RIAs
Cerulli is citing growth of independent broker/dealers, not RIAs, but the opportunity is immense for custodians.
Like wirehouses, independent broker/dealers do not acknowledge the fiduciary standing of their brokers nor do they support it, so advice and achieving advisory services scale is not possible. Thus the use of the phrase “independent” is not to imply independent broker/dealers support advice and wirehouses don’t, neither do. To avoid confusion, the RIA business model is not synonomous with the independent broker/dealer model, as Mr Collins a former Wells Fargo FiNet advisor found in starting his own RIA, the Collins Investment Group.
Cerulli is talking about the Independent Broker/Dealer business business eclipsing full service brokerage firms, not the RIA business focused on advice, eclipsing the full service brokerage business focused on transactions.
The challenge for the custodian sponsors of the Barrons 100 Conference is for them to directly or indirectly offer the enabling resources in support of advisory services and fiduciary standing not possible in the brokerage industry so the under resourced advisor(RIA)can achieve operating scale not possible as an individual advisor.
Access to the prudent processes, technology, functional division of labor, statutory documentation, conflict of interest management and advisory services support not provided by the brokerage industry will exponentially grow the RIA business. Presently each individual advisor has to reinvent the wheel to the best of their knowledge and ability requiring expertise in technology, statutory documentation and conflicts of interest in which they have little exposure, expertise or interest. Thus, leaving the door wide open for custodians who accordingly support advice. In that case, Cerulli’s growth estimate would indeed apply to RIAs and those that focus on advice rather than transactions. Every advisor who wishes to act in the best interests of their clients and every consumer seeking expert counsel would be attracted to the RIA model, which is just about everyone.
It is inevitable the industry will be reordered around advice and the consumer’s best interest, it is just a question of having the presence of mind to see the opportunity, having the vision, know how and capital resources to execute. So, in 2015, the brokerage industry may indeed wake up. But for now it is a golden opportunity for custodians or a new generation of advisory services firms like HighTower, United Capital, Clearbrook, etc who will provide those necessary enabling resources which would safely bring easily executed fiduciary standing within the reach of all.
As a compliance reminder, whether a ranking is from Barron’s or any other organization, RIAs must be extremely careful when advertising those ratings on their website or in marketing materials. There are SEC no-action letters that recommend what types of disclosures should accompany rankings referred to in RIA advertisements.
Don’t get me wrong. I have no beef with Barron’s rankings. My only concern is whether RIAs disclose in advertisements how the rating was formulated.
If you receive recognition from Barron’s or another organization, check with your chief compliance officer before advertising it. Don’t ask me, because the only recognition I’ve ever received is a coffee cup that says, “World’s Dullest Compliance Guy.”