The Leading Indicator: Breakaway lawyers turn the tables and invite RIA providers to their own conference

Recently, RIAbiz.com’s Elizabeth McBride asked why our industry hosts so many conferences. I guess it’s a fair question. At last count, there were too many too count. Having barely worked in any other industry in my life it never occurred to me that we had more conferences than other professions.

Never one to shy away from joining the crowd, I decided to double the number of conferences my firm, MarketCounsel, holds each year (from 1 to 2).

This one, though, was going to be different than the Member Summit we hold each year for RIAs.

While advisors are used to learning, networking and collecting CE credits at industry events hosted by service providers and professional organizations we who offer services and products to advisors typically don’t share in that activity.

Joy of attending a conference booth

Let me clarify that last statement. Sure, we’re at the same conferences as the RIAs, but we’re typically sponsoring, speaking, exhibiting or a combination of the three. Make no mistake about it, the conferences we “attend” are not for us; we just help pay for them.

For those of you who never had the pleasure of standing in an 8 × 10 “booth” with your company’s best giveaway items and glowing media reprints strategically fanned out across a table in front of you, well, you just haven’t lived.

The disposable, soft-as-granite carpeting which you tread on for 2 or 3 days ends up making your knees and lower back feel like you’ve just run a 5k marathon through mud. And when it’s all done, you can grow old waiting for the shuttles and in the airport security lines with those, like you, trying to leave early and “beat the rush”.

We decided at MarketCounsel to hold a conference for just those people: the service providers. The purpose of the conference was two-fold. First, the service providers would benefit from two days of learning about such topics as intellectual property issues for advisors, the mechanics of a breakaway transition and corporate structures for RIAs.

Secondly, we wanted to say “thank you” to our partners for their support over the past 10 years. This wasn’t a money- making venture, as attendance was free, although co-sponsors Fortigent and PKS helped soften the financial burden.

Professional differences at the door

We wanted attendees, all competitors with one another, to leave their professional differences at the door and convene for 2 days of learning about the industry. Where would such a noble, cerebral, unique educational endeavor such as this be held? Las Vegas, obviously.

About 30 Representatives from Pershing, TD Ameritrade, Schwab, Fidelity, LPL, and RBC converged on the Red Rock Resort (at least we kept it off the strip).

“This is not a workshop, and that’s intentional”, said Brian Hamburger during his opening remarks. He reminded the attendees of their duties of confidentiality to their respective firms. He continued, “We’re not going to discuss specific deals, clients or prospects. This is a download of information to you.”

The vibe in the room as we kicked off the conference was a little strange. The seating arrangements, while totally open, resembled the cliques in a high school cafeteria- Fidelity people to the left, Pershing toward the front, Fortigent to the right, LPL way in the back.

I’m relatively certain that 6 or 7 years ago, a conference like this would have been impossible to pull off. Back then, there was no baseline of knowledge about breakaways amongst the custodians.

RIA market becomes an industry

In fact, it’s only been in the last 2 or 3 years that I can say every major custodian is not only dedicating massive resources to attract breakaway brokers to their platform- but the very success (in terms of growth) of all of their platforms actually relies on converting these reps to RIAs.

Dan Cronin, senior vice president of RBC Advisor Services, commented, “Back in the mid-90’s (when he was at Schwab Institutional) we called it the RIA market. But sitting here I think we all realize we’re involved, not in a market, but in a growing industry.

He added, “It’s critical to understand the risk environment of any growth industry where you’re investing significant resources.”

In the Wave

Indeed, the common sentiment, and one can say the undertone of the whole conference was that we aren’t waiting for our industry to emerge, or reminiscing on the good old days of a dying trend — we are in the midst of the movement — we are in the wave.

And while executives from Goldman Sachs raise their right hands before Congress and attempt to artfully wordsmith their way out of selling “crap” to their customers, those that represent a way of doing business that embraces the fiduciary standard, all competitors to one another, gathered in a conference room in Las Vegas trying to better learn how to take advantage of the realization that the trend is NOW and determine how to best siphon more people and more assets out of the major wirehouses.

Gary Carrai, vice president of Fortigent, probably said it best during his portion of the opening remarks when he commented that he was, “looking at the people who were changing the way financial advice is delivered”.

And to those of us who are currently making their living aiding and abetting defectors from the world of the suitability standard and FINRA: Get your boards … surf’s up.