Barron's top advisor shares the secrets to his success with rapt RIAs at TD event

Eager advisors at TD Ameritrade’s Elite Advisor conference crowded into the Fontaine Ballroom last week to hear an industry superstar (and fellow TD client) hold forth on how to transform an advisory firm into a world-class brand.

Edelman’s level of success is such that Sanders Morris Harris Group, the venture capital firm that bought 76% of his firm in 2005 recently rebranded itself under the Edelman banner, making Edelman the president of the first publicly traded advisory company in the country.

Edelman Financial Services manages $6.5 billion for some 15,000 clients. Edelman himself is a media star, having authored seven books that have sold over a million copies and who stars in the television and radio shows, “The Truth About Money with Ric Edelman.”

Spend money to make money

They key to growing an advisory business into a corporate brand is scalability, Edelman says. Referencing the Starbucks model, he noted that “Clients must be secure in the knowledge that you can resolve issues with same level of success. You can’t do 10,000 things,10,000 ways for 10,000 clients.”

To achieve the level of consistency, it’s necessary to make massive investments in technology, says Edelman, who noted that he recently spent $2 million on a new CRM system.

Continually ramping up personnel, office space and marketing are also key. “The more money I spend, the more I make,” he says. See: Edelman expansion slows; back office 'overwhelmed’

‘Marketing is a promise’

But “what will take your business into the big league is marketing,” says Edelman, stressing, however, that it’s crucial to get the word out about your firm after – not before – you’ve codified your investment strategy and made the necessary financial investment to build an effective, efficient organization.

Unlike computer manufacturers, who tend to sell their product first and fix it later, “Make sure your infrastructure is in place before you advertise,” he says.

“Marketing is nothing but a promise. It does not lead to revenues, it’s designed to make a first impression which… leads to a chance for you to fill [the client’s] needs,” Edelman says.

Underlying assumptions

After laying out his strategy for growth, Edelman shared core assumptions regarding the present and future of the financial industry:

• Consumers are evolving, becoming smarter and more educated about investment products. As a result, transparency and fiduciary responsibility will continue to gain importance.

• “Mutual funds are dinosaurs” – ETFs will prevail.

• Along with mutual funds, sole practitioners are also going the way of the dodo: “Grow, consolidate or die,” he says. See: Why Joe Duran believes that classic RIA firms face extinction

• “You will master technology or be crushed by it.”

• Between the potential of technology to increase scale and the aging demographic, the industry can look forward to a massive increase in assets.

Choosing TD

Speaking with a reporter after his speech, Edelman discussed why he chose TD Ameritrade – a less common choice for giant RIAs — to custody his assets.

When Edelman was shopping for a custodian four years ago (in a move from Royal Alliance), the smart money had him choosing Schwab, the industry leader. But after satisfying himself that smallest of the top-three custodians possessed the technology and scale to handle such a mammoth account, Edelman chose TD because of the its “sincere interest” in his business. Schwab’s attitude, by contrast, was a bit “cavalier,” he said.

Edelman further cited TD’s “great services, personnel, and commitment to [my] business. The staff act like they’re employees of the firm.”

More stories on Ric Edelman:

Edelman joins ranks of TV RIAs with PBS show that will reach 20 million

What lessons can Barron’s #1 rated financial advisor teach us?

What Ric Edelman is like live on stage