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Advizent hits $100-billion asset target in a matter of weeks triggering hires

The RIA grand brand and co-op gains momentum as Charles Goldman goes all-in

Author Brooke Southall June 4, 2012 at 5:23 AM
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Charles Goldman: We've barely scratched the surface of our networks.

Charles Goldman


Steve Lockshin


Harold Evensky


Jane Williams


Blaine Lourd

Where is the value????

Where is the value????

June 4, 2012 — 5:49 PM

Signing an indication of interest is one thing, contractually obligating to spend $25,000 to $100,000 with a “marketing/compliance/standards company” that is going to roll you up with 1500 other RIAs seems like a waste of time. You can hire some really creative marketing teams to develop your campaigns much more effectively than this.

If you want standards in the RIA world this is a role for an SRO to play, not a for private company. Additionally, the first 72 RIA into this are funding the standard for everyone else. It will take years for this to become a standard that the public even puts any weight into it and without some sort of SEC/SRO label attached to it that was mandetory will probably keep it from taking off. All you have to do is look at the CEFEX certification, outside of people in the business, nobody knows or cares about it. In the end, I think the only people that make money off this project are Lockshin and Goldman. Hopefully the initial 72 “clients” get an equity stake in the company as they are in essence funding it for the rest of the 1500 RIAs they want to go after once they build their brand up over the next 5 to 10 years.

Brooke Southall

Brooke Southall

June 4, 2012 — 6:09 PM

Hi Value???,

You certainly bring up a big issue. I can tell you from speaking to these guys that they are sensitive to it — reiterating (from their comments in the first article we wrote about this) that they won’t be comfortable charging dues until they have provable value.

The freeloading issue is more complex but….When I spoke to Harold Evensky for this article he mentioned that the savings alone on E&O insurance might pay his dues. There is a thought of massing everyone together and getting a big policy from Lloyd’s of London.


Stephen Winks

Stephen Winks

June 4, 2012 — 6:47 PM

The devil is always in the details.

If you were engaged by brokers or advisors who have a billion plus under advisement, to find institutions that support expert fiduciary standing based on objective criteria of statute, case law and regulatory opinion letters, which provides large scale institutionalized support for fiduciary standing so advice was safe, scalable, easy to execute and manage as a high margin enterprise —-you would find no alternatives.

Brokerage firms do not support advisory services beyond treating it as a product brokers sell and custodians do not want to provide the necessary enabling resources for fear of being prescriptive, thus incurring fiduciary liability.

Thus if Advizent is an RIA, with no brokerage conflicts, and has the intellectual and financial capital to fill the holes in the brokerage business model that makes fiduciary standing safe, scalable and easy to execute and manage—Advizent can win massive market share. But, if their initial hires are focused on marketing hyperbole with none of the substantive innovations required, it will be just more hype in an industry notorious for its hyperbole.

Essentially, what is needed to fill the industry’s leadership vacuum is a responsible approach to expert fiduciary standing that professionally manages fiduciary liability. So far, no one has met that call. Let’s hope Advizent is the first to do so. Extrapolation of brokerage support for advisory services built on vendor infrastructure which does not support finduciary standing does not fill the leadership vacuum.

Advizent needs to get beyond a general description of the challenges the industry faces in supporting fiduciary standing and address specifically how it makes fiduciary standing safe, scalable, easy to execute and manage as a high margin business at the advisor level.

It has been my experience that neither Lockshin and Goldman want to delve into the detail necessary to create large scale institutionalized support for fiduciary standing—which actually resolve the industry’s leadership vacuum. If Advizent’s solution is to let the individual broker or advisor assume the fiduciary liability forcing each individual to reinvent the wheel, then the safety, scale, ease of execution and management sought for professional standing is not achieved.

Advizent is just in its formulative stages, so high hopes are accorded, but if it is just more hyperbole so common in our industry—again we will be disappointed yet again.


Where is the value????

Where is the value????

June 5, 2012 — 2:24 PM


Well thought out and I agree 100% with your comments. Brooke, Harold Evansky is off his rocker if he thinks that joining Advizent is going to lower his fiduciary liability by the amount of the membership costs as each RIA firm has a different approach to how they manage their business and a one size fits alll group E&O insurance approach will not work. For example, those firms that use private placements and other alternative investment strategies pay a higher fee than those that don’t. Same thing with those that are in the ERISA space and have to be covered as 3(38)s.

What should really happen is that RIA firm should do peer reviews of eachother like CPA firms do which you can find here: http://www.aicpa.org/interestareas/peerreview/pages/peerreviewhome.aspx

This probably would only work for 100% RIA firms that are fee only and have no conflicts of interest as they are the only ones that can consider themselves truly fiduciaries.

As far as a value added for RIAs, Advizent if it carries weight with consumers is a nice thing to have but I peg the value of the membership at $2,500 not $25,000. It should be a non-profit, with an independent board of directors, and should serve in an SRO capacity, rather than a for profit motive.

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Mentioned in this article:

National Association of Personal Finance Advisors
Top Executive: Geof Brown, CAE

Certified Financial Planner Board of Standards
Top Executive: Kevin Keller

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