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Dynasty fetes its RIAs with bottles of bubbly on the Fourth -- but with an anti-revolutionary message

Popping a cork to celebrate newly independent advisors is a grand idea. But is it revolution or evolution?

Author Brooke Southall July 5, 2012 at 5:01 PM
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Independence doesn't have to be thought of in terms of bayonets and bandages, or does it?

Stephen Winks

Stephen Winks

July 5, 2012 — 5:28 PM

At the advisor level, evolution increase complexity, revolution reduces complexity.

Edwards Deming who revolutionized the automobile industry, to the chagrin of US manufacturing, observed, “if you can not describe what you do as a process, then you don’t know what you are doing.” If we apply that to the brokerage industry as it evolves to advisory services, it would be easy to suggest that two years after Dodd-Frank the brokerage industry does not know what it is doing. Is there another industry that after two year of having a statutory mandate from Congress to hold brokers accountable and responsible for their recommendations when rendering advice, that would have made absolutely no progress. Many believe that self regulation under FINRA does not work, citing fiduciary duty of brokers as exhibit A. It is difficult to disagree. As with the FSA in England, fiduciary standing was mandated.

Stephen Winks

Stephen Winks

July 5, 2012 — 5:45 PM

At the advisor level, evolution increases complexity, revolution reduces complexity.

Edwards Deming who revolutionized the automobile industry, to the chagrin of US manufacturing, observed, “if you can not describe what you do as a process, then you don’t know what you are doing.” If we apply that to the brokerage industry as it evolves to advisory services, it would be easy to suggest that two years after Dodd-Frank the brokerage industry does not know what it is doing. Is there another industry that after two year of having a statutory mandate from Congress to hold brokers accountable and responsible for their recommendations in rendering advice, that would have made absolutely no progress.

Many believe that self regulation under FINRA does not work, citing the industry’s push back on fiduciary standing as exhibit A. Fiduciary standing is not a negotiation, it is a requirement if one is to act in the best interest of the investing public. As with the FSA in England, fiduciary standing was mandated.

In the US system, the interests of the consumer are secondary to that of the consumer, thus Dynasty just has to evolve faster that the industry as a whole, while in England, if it is in the consumer’s best interest—revolution is mandated—as is the case with medicine and other professions that serve the greater good. Advisors would argue the difference between a broker and an advisor is integredity which highly values revolution rather than compromizing the best interest of the investing public.

The answer to restoring the trust and confidence of the investing public is revolution unquestionably in the best interest of the investing public. Isn’t it a matter of principle?

Dynasty just made an unfortunate use of words which are very important to advisors.

SCW

Mindy Diamond

Mindy Diamond

July 6, 2012 — 2:22 PM

Hockey great, Wayne Gretzky once said, “Skate where the puck is going not where it’s been.” Make no mistake that the shift toward independence is not a passing craze. More and more advisors want to have greater control over their business lives and will pass up the big short-term reward (the transition bonus) in return for superior quality of life, better long-term economics, and business ownership. That said, a solid percentage of all advisors will and should remain in the wirehouse world because they either rely on name brand, do not have entrepreneurial DNA, and/or they want to take advantage of the outsized transition packages being offered today to incent movement.

Stephen Winks

Stephen Winks

July 6, 2012 — 3:16 PM

Mindy makes a great point.

Outsized recruiting bonuses more often win the day than not, but we are nearing the point where the cost of the industry compromizing the best interest of the investing public and the good conscious of brokers who are compelled to act in their client’s best interest exceeds any amount of money as the integredity of the broker is not for sale.

Recruiting bonuses are the only thing that is propping up the industry’s long held insularity to the best interest of the investing public. At some point in a free market, the best interest of the investing public always prevails—will it boil down to the integredity of the broker or the enlightened best interest of the industry to embrace modernity to serve as the catalyst for the best interest of the investing public to be served ?

SCW

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Mentioned in this article:

Dynasty Financial Partners LLC
Specialized Breakaway Service, Mergers and Acquisition Firm, RIA Set-up Firm
Top Executive: Shirl Penney



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