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How RIAs are becoming as complacent as wirehouses -- and what it'll take to snap out of it

There is empirical evidence that challenges are increasing but also reasons to believe they can be met

Author Guest Columnist John Furey December 10, 2012 at 4:18 AM
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John Furey: Ignoring changes to the market could be dangerous and outright irresponsible.

Dave Welling

Dave Welling

December 10, 2012 — 8:36 PM

Thanks to John (a former colleague and still good friend) for stirring the pot. I agree with many of his points and the general thesis – complacency kills. Two key points I agree with…
1. The bbery trap… For those following the singularity movement (thanks Schwab for having Peter Diamandis speak at IMPACT!) you need to know where technology is going, not where it is and how it can help solve problems you are still solving with “old ways”. Advisor technology and the technology your clients have access to everywhere else is booming. Advisors who are still working of yellow pads of paper and want their clients to call them with every question are missing the big shift in technology and the benefits to provide a better experience for clients.
2. WealthFront, Bettermint, Personal Capital and others are trying to change the game. Advisors have a hard time seeing these models as replacements for them… Whether they will/won’t is not the point. They are charging less than 25% of what advisors charge. Are you providing 4x the value? Could you do what you do at half the price?
One point, I’d choose to put a finer point on is scale. It’s critical, but getting bigger doing the same thing is not scale. In fact, every industry benchmarking study – including those I oversaw and published at Schwab – indicate that most firms just add staff as they grow and their productivity (profitability, rev. per prof.) actually stay flat or even decline. The point is focus on productivity and a firm that isn’t dependent on just a couple of people. That’ll position you to compete regardless of size.

Brooke Southall

Brooke Southall

December 10, 2012 — 9:31 PM


The hope of an article like this one of course is that it’ll stir up some deeper thinking and comments in line with that — and this comment certainly fits the bill.

It’s better to raise a potentially false alarm about the online advisors than to have a sense of confidence that turns out to be false. An industry that is its own worst critic seems to be the one that will prevail over the long haul.

many thanks,


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Mentioned in this article:

United Capital Financial Advisers
RIA Welcoming Breakaways
Top Executive: Joe Duran

Advisor Growth Strategies, LLC
Consulting Firm
Top Executive: John Furey

Betterment, LLC
Financial Planning Software
Top Executive: Jon Stein

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