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

We weren’t planning to run an article today — after all, journalists need rest, too. But when Dynasty Financial Partners LLC 's Sally Cates sent me a tongue-in-cheek e-mail informing me of her firm’s plans to honor its mostly all newly independent clientele with a sort of Independence Day minus the revolution gift, I took the bait.

Turns out, when Dynasty’s RIA clients return to their offices after a day of cookouts and fireworks, they’ll find bottle of Champagne courtesy of the firm — along with a somewhat counterintuitive note that begins:

Independence should not be confused with revolution.

Here is the note you received with your Champagne if you are a client of Dynasty Financial Partners.

Dynasty is not calling for musket
fire.

This suggests, of course, that breakaway RIAs are not engaged in a revolutionary activity. See: What is the value proposition of a financial advisor — and how is a budding RIA culture upping the ante?.

How history will judge the RIA movement

My mind did several revolutions on this premise before deciding that, ultimately, I disagree with the sentiment.

A revolution is a fundamental change in power or organizational structures that takes place in a relatively short period of time. The next closest thing — an evolution — is a process of gradual, peaceful, progressive change or development, as in social or economic structure or institutions.

The wIrehouse model’s changing from one based primarily on commissions to one based on fees seems like an evolution.

In contrast, the jump from a corporation-first, salesman-first, legacy-system setup where they fix your phone and provide free cross-selling training — such as at Merrill Lynch or Morgan Stanley — to calling all the shots and assuming full responsibility for the outcome under an RIA — that seems like a fairly revolutionary act. See: Nine threats to the RIA business and how they can be avoided.

Brooke Southall: I’d like to believe
that the change from the wirehouse
world to the RIA business will
be viewed as a revolution.

I’d like to believe that the change from the wirehouse world to the RIA business will be viewed, at least in retrospect, as a revolution. Taken in the aggregate of hundreds of these acts being taken each year, it certainly feels like a revolution — or the seeds of one.

Better start swimming

Needless to say, many of the articles we write every day about this business are more about evolution that revolution. Once an advisor becomes part of an RIA, the work of evolving has, indeed, just begun. Still, I’m not sure I’m patient enough for all evolution all the time. It doesn’t mean I’m anti-wirehouse per se. I just suggest that if they don’t have their own revolution soon, the Dynastys of the world will have it for them. See: How RIAs describe exactly what they do in a few choice words.

When I e-mailed Shirl Penney, CEO of Dynasty, to say I could use more of his philosophy of why he sees his company as more an agent of evolution than revolution, he gave response that is perhaps more Charles Darwin than Patrick Henry.

“It’s not about where you have been, its about where you are going and why. Independence as a preferred client coverage model is the future. Getting to that point has taken literally 20 years of industry asset drain and business model shift, but its at a turning point in near term where there will be more assets on independent chassis than banks and wires combined.”

Dynasty now has 12 firms with a combined $11.5 billion of advised assets on its platform of wealth platforms that is about 50% portal for other firms’ services and 50% proprietary technology. The New York-based firm had a net gain of $10 billion of assets last year and it is seeking a similar haul in 2012 — mostly ripped fresh from the grasp of the wirehouses.

Final note: Please offer thoughts about whether or not the movement of wirehouse brokers to independent models should be viewed as a revolution in the comments section below. Perhaps it’s all semantics, but I think it’s worth thinking about — if it means walking into battle with or without a bayonet.