Others mentioned that that advisors are seeking more complete wealth management solutions such as CRM, portfolio management and financial planning, and the freedom to truly operate in the best interests of their clients.

Schwab provided stats that indicate their new relationships with advisors from IBDs were up over 45% in 2010.

For more information or to read the full article, see link below.

http://www.riabiz.com/a/5391326

How to Move from Administrivia to Improved Productivity and Enhanced Lifestyle

Small to mid size registered investment advisors encounter many of the same challenges that other individual fee based advisors experience trying to operate an efficient practice while managing a growing and increasingly complicated business model. Whether it’s staffing demands, increased regulation, dealing with the need to upgrade or integrate technology, or just plain not having an organized and systematic approach to their business, RIAs can quickly become burdened with excessive administrivia. Ironically, the success advisors have attained with their clients invariably results in a growing need for breadth and capacity that is typically difficult to muster up in a small business. Moreover, advisors often times become distracted in their attempts to solve for these issues at the expense of their client relationships and service.

Firms that are most affected with the administrivia affliction tend to be solo practitioners or smaller RIAs, but it’s becoming increasingly common for larger firms to seek outsource solutions to mitigate the operational, compliance, technology and even investment management challenges that are part of operating an RIA.

As a result of many conversations with principals of RIAs experiencing administration overload, Dynamic Wealth Advisors created RIA services that help firms to help them refocus their efforts on their clients and developing their business. Among the services offered by DWA are:

• Access to DWA’s wealth management platform with unified CRM, portfolio management and financial planning solutions, email, electronic workflow, document management and storage.
• Account services including processing applications with custodians, trust companies and other investment management companies
• Account billing, fee payment, and performance reporting
• Data aggregation and reconciliation
• Custodian management services that enable the firm to access custody with major institutional asset custodians with preferential services and pricing
• Access to institutional investment management solutions including asset allocation models

The combination of these services may be altered based upon the needs and resources of the RIA. As with advisors using DWA’s IAR services, RIAs will be in a much better position to dedicate their time and attention to their client relationship, service, development of their businesses, and hopefully enjoying their success and freedom from administrivia .The past few years have shown an increasing interest in the RIA business model. No doubt the industry will continue to see growth in both the number of advisors and RIAs for the structure enables advisors to perform wealth management services in a manner that best aligns their interests with their clients. Whether advisors choose to establish their own RIAs or join an existing RIA, DWA is positioned to successfully provide the services and guidance that firms and advisors need.

Part 1 – Roll-Up RIAs, Part 2 – Employer RIAs, Part 3 – RIAs owned by firms with affiliated “independent” broker-dealers - coming soon!

Each of these service models has its advantages and disadvantages, so carefully determining your needs and preferences, and understanding the characteristics of each model is crucial to finding your ‘right fit’.

Employer RIAs

As their name implies, ‘Employer RIAs’ are structured to allow individual advisors to join the firm as an employee. The primary benefit of this arrangement for the advisor is being able to take advantage of the existing RIA advisory model, without having the responsibilities of starting and running a firm. The benefit to the firm is, very often, acquiring the advisor’s AUM. In this model, the advisor fully transitions to the existing firm’s branding and resources. Advisors are typically required to operate from the firm’s office and support is provided by firm staff. Branding and resources are defined exclusively by the firm, and there is little to no room for deviation from set standards. There are variations between ‘Employer RIA’ platforms. For example, in some models advisors turn over ownership of their clients to the firm; in others, advisors may retain client ownership, but sign over AUM. These firms typically provide money management services which are proprietary and, many times, restrictive. Custodians may or may not be limited. In this model, the firm is generally not a broker-dealer but may offer options for commission business as an option. Upon signing with an ‘Employer RIA’, the advisor generally receives a “payout” ranging from 50% to 70% of fees.

 The DWA Independent Advisor model offers many of the attractive benefits of the “Employer RIA” without the drawbacks. In the DWA model, advisors enjoy all the benefits and freedoms of running their own advisory business – but can leave the resource-draining details of operations, compliance and logistics management to the DWA team. Additionally, DWA offers advisors a broad range of services in an open architecture manner, including choice of investment management and custodians. And this flexibility won’t break the bank – advisors are simply charged a service fees based upon AUM. Best of all, DWA makes it possible for advisors to run their own profitable and rewarding business. By providing advisors with dedicated support resources, leading-edge technology, and an engaged community of like-minded advisory business owners, DWA advisors are truly independent, but never alone.

Having a successful transition takes carefully planning, as emphasized by this particular advisor panel and experts. The following are some of the key areas on which you should focus when thinking about your transition:

1.  Create a detailed plan. While this seems obvious, a thorough plan that considers your financial, opertional, legal, regulatory and technological functions is absolutely necessary.

2.  Seek out experts at custodians, consulting firms or the RIA firm with which you affiliate. Finding an RIA that has solid relationships with custodians, and extensive experience with transitions of business from firms like the one you are exiting is a great way to avoid “reinventing the wheel”.

3.  Understand the Broker Protocol and whether it applies to you. Again, dealing with an expert and/or firm that has experience is essential.

4.  Plan sufficient time and resources. Unless you decide to affiliate with an existing firm, plan to spend several months researching, developing and solidifying your infrastructure. The key benefits of working with an proven RIA is that you will be able to leverage its experience and substantially reduce the time to transition, and the on-going operational issues that you would face if going at it alone.

This is the latest change from one of the industry’s largest asset custodians for RIAs.  As their business matures, custodians smartly evaluate the viability of their RIA relationships, and of course, assets are the name of the game.  Lower asset levels, competitively priced ticket charges and smaller accounts typical of smaller firms all translate to lower margins for custodians. Thus, some custodians are looking for ways to offset the differential, and some may argue, to entice smaller firms to merge. For start-up RIAs or firms below $30 million, there’s a constant challenge to ensure that the services and pricing used in your model doesn’t change.  Other areas that impact smaller RIAs are access to top level services teams, ability to hold alternatives and access to the management sometimes needed to resolve more difficult client issues. 

The AUM and profitability levels at which custodians derive their decisions will ebb and flow with business cycles and the evolution of their businesses. Unfortunately, smaller RIAs will always be at a disadvantage.  Not unlike low producing brokers at wirehouses, these RIAs will be subject to the shifting landscape to a much greater extent than firms over $100 million. With increasing regulatory issues, potential changes in custody services and pricing, and need to stay abreast of a broader range of issues to properly service clients, the industry may experience an increasing interest from smaller firms to merge, outsource services and refine their business models.    

For a complete copy of RIAbiz.com’s article, please click below.

http://www.riabiz.com/a/2394022

1. Is the compliance disparity getting in the way of doing business properly for your clients?

2. Are there services that you no longer need that you are paying your brokerage firm for?

3. Does the brokerage firm have a true interest in seeing that you are successful as a fiduciary advisor to your clients, or do they approach this aspect of your business in the same manner as if you were involved in a variable annuity or mutual fund transaction?

4. Are you able to offer the most appropriate services and products, or do you sometimes sacrifice to make the relationship work for your brokerage firm?

5. Is there value that the brokerage firm provides beyond what would be available through custodians, and other service providers that are specialists in the fee based business?  

While these issues all come down to a personal decision, as the industry continues its move toward fees, a greater share of advisors are saying they no longer need the traditional support of a brokerage firm.  This recent article cites a few examples of advisors that moved without their 7′s.    

http://registeredrep.com/advisorland/certification/finance_outgrowing_series_2/

While many advisors have already tried, or are now busy trying, to put together the elusive “integration” of their CRM, portfolio management, financial planning and trading systems, both Schwab and TD Ameritrade have recently announced major initiatives that purportedly bring advisors to the promise land of platforms.

Take note that these efforts are monumental and probably limited to certain providers. For advisors that are looking for ready to go solutions, there are few (Interactive Advisor Software is one)  that really bring together the complete aspects of a platform that most advisors are seeking. As you review this article and look at your options, you may come to the realization that in many cases, advisors are better served outsourcing this aspect of the business and instead spending their valuable time serving their clients and developing new ones.

To read article, click on link below or copy to your browser.

http://www.financial-planning.com/fp_issues/2010_8/waiting-for-intelligent-integration-2667984-1.html?ET=financialplanning:e1731:1992922a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=fp_online_080110

To read article, click on link below or copy to your browser

http://www.riabiz.com/a/46097