Dynamic Wealth Advisors

Beyond Independent

Click here to contact us or call 877.257.3840

On the Right Side of the Way Things Work.

A blog about moving beyond independence for financial advisors

Archive for the ‘Practice Management’ Category

It is not about price, it comes down to trust
Tuesday, September 20th, 2011  |  Filed Under: Practice Management

“The demand in finances doesn’t respond to price,” Trott says. “Having a lower price doesn’t guarantee you more business. It’s not really about the price. It’s about the quality of service.”

There’s a great article in RIAbiz.com about pricing advisory services. It’s based upon a study conducted by PriceMetrix showing that advisors who didn’t lower their fees in the aftermath of 2008 market are much better off today than those who decided to reduce their fees.

This is more evidence that clients are seeking good advice from trustworthy advisors more than a deal on the management of their financial affairs. Take a look at the article

Clients Are Increasingly Using Multiple Financial Advisors
Wednesday, August 17th, 2011  |  Filed Under: Practice Management, Uncategorized

This recent article (see link below) really caught my attention. It is a very enlighting that the statistics discussed indicate many investor clients have determined that they can fend off challenging markets and volatility by engaging more than one financial advisor to handle their financial affairs. Moreover, the more wealthy the client is, the more likely they are to utilize many advisors. Perhaps diversification is part of the driver, but this trend sure appears to be an opportunity for seasoned advisors who have the platform capabilities to efficiently organize the clients’ data, reports and recommendations. Few firms provide advisors with the right wealth manager tools to position themselves for this type of role, and it’s it fairly challenging for individual advisors to scale their operations to offer these kinds of capabilities. Advisors who position selves with a firm that supports a wealth manager role will have much greater success serving these types of the clients.
(more…)

When “100% Payout” is Not What You Think.
Wednesday, July 13th, 2011  |  Filed Under: Going Independent, Practice Management

One of my father’s favorite sayings was “there is no free lunch.” As much as I tried to prove this wrong over the years, I admittedly learned in business – - the hard way a few times – - that there’s typically a catch to just about everything that’s “free.”

Knowing that the brokerage industry is famous for the many ways it creatively generates revenue streams from products and services, I thought about the aforementioned truism with a recent industry news column about a brokerage firm announcing “100% payouts” on fee based business. Even among the least suspecting of industry participants, this type of a claim raises questions, if not a big red flag.

For anyone who has ever managed a broker-dealer, you know that 100% doesn’t add up to 100% in broker-dealer land. There all sorts of ways firms play games with their math to create the illusion of higher payouts. Marketing allowances, revenue sharing, mark-ups on administration, ticket charges, postage and handling are just a few ways brokerage firms generate extra income to cover their high payouts. When one adds it all up, you have to wonder why b/ds would go to such an extreme measures. Why not just charge a fair and competitive rate for the services provided? Well, the answer is as elusive as the word “transparency” tends to be in the broker-dealer world.

One of the most refreshing aspects of the RIA business model is that there’s an appreciation for, and reality to the costs of operating a business. Perhaps it’s the simplicity of a 1% fee annual fee and that there are fewer mouths to feed in the advice model that drive this thinking. Even the least sophisticated of fee advisors seem to have a greater appreciation for transparency that enables them to operate in complete alignment with their clients.

At Dynamic Wealth Advisors, we generate profits one way: with service fees received only when we service your fee based assets. There are no mark-ups, no marketing allowances or other “funny money” as I like to call it. Our interests are completely aligned with RIAs and IARs we serve. While the RIA business may not be a perfect model, from my view there seems to be much more understanding and appreciation for the value that industry participants like DWA are able to create for advisors and a lot fewer tempted by “the free lunch.”

Are IBD Reps the Next Wave for RIA Model?
Monday, January 24th, 2011  |  Filed Under: Custodians, Going Independent, Practice Management

A recent article in RIABiz.com predicts that advisors moving to the RIA model will be coming in greater numbers from independent broker-dealers. The sources point to the fact that many advisors are reaching the magical $100 million of assets under management that many times creates the urge to make the switch to more capabilities and the opportunity for greater control as a business owner and advisor. 

Mindy Diamond, an industry recruiting consultant was quoted as saying, “There are more of these restless outliers because of an increase in fee business for all advisors (so the more fee-based, the more they can consider the RIA space), and because the hyper-vigilant compliance cultures at the IBDs make it harder and harder for advisors to grow their businesses.” 

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

RIA Administrivia
Wednesday, January 5th, 2011  |  Filed Under: Custodians, Going Independent, Practice Management

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.

A year-end checklist for IRAs
Monday, November 22nd, 2010  |  Filed Under: Practice Management

 

This year, there are many loose ends that financial advisers shouldn’t neglect to tie up

Investment News November 21, 2010 6:01 am ET

 In the rush of year-end activity, it’s important not to forget your IRA-related to-do list. The following are some of the most overlooked year-end items.

RMDs. Required minimum distributions were suspended in 2009 but are back for 2010. Most retirement account owners and beneficiaries (including Roth individual retirement account beneficiaries) subject to RMDs must take them before year-end or they’ll be subject to a 50% penalty on any missed distributions. The amount of 2010 RMDs will be based on the Dec. 31, 2009, balance.

Remember that RMDs must be taken for clients who died in 2010 and had not taken their RMDs. The RMD must be taken and reported as income by the beneficiary. It is not taken by the estate of the deceased IRA owner (unless the estate was the IRA beneficiary). 

Splitting IRAs. Designated (named) beneficiaries who inherited IRAs in 2009 have until Dec. 31 to split the account into separate shares so that each beneficiary can use his or her own life expectancy to calculate RMDs. Each share should be transferred into a separate, properly titled inherited IRA. The account can be split after Dec. 31, but beneficiaries will be “stuck” using the life expectancy of the oldest beneficiary.

2009 plan beneficiaries. Beneficiaries who inherit plan assets generally are subject to restrictive rules of the plan. An exception allowing plan beneficiaries to escape the plan’s rules and secure a stretch IRA is available for those who directly transfer inherited plan funds to an inherited IRA or convert directly to an inherited Roth IRA and take their first RMD — both by Dec. 31 of the year following the year of death. So beneficiaries that inherited plan assets in 2009 have only until the end of next month to complete their transfer and take their first RMD to avoid reverting to the plan’s rules.

For more information, click below.

http://www.investmentnews.com/article/20101121/REG/311219985&dailycount=7&issuedate=20101122

Choosing the Right RIA Firm for Your Practice – Part 1
Wednesday, October 27th, 2010  |  Filed Under: Going Independent, Practice Management

Understanding Your Options       Part 1 – Roll-Up RIAs

 We have discussed the advantages of joining an Independent RIA in earlier posts . But for some advisors, the decision to do so only creates more questions and can be mired in confusion. What type of RIA service model best fits your needs?    

In a series of posts, we will examine several typical RIA service models that prospective advisors can consider when deciding to join an existing RIA – and we’ll compare each to the DWA Independent Advisor platform.  We will examine one model type per post to keep things simple. 

Part 1 – Roll-Up RIAs

Part 2 – Employer RIAs

Part 3 – RIAs owned by firms with affiliated “independent” broker-dealers

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’. 

Roll-Up RIAs

Roll-up RIAs are structured in essence, as a vehicle to ‘pool’ the assets of many advisors in order to create and grow a single larger entity.  These firms are often referred to as “advisor owned” companies, and position advisors as shareholders of the parent company. 

The roll-up RIA business model transitions advisors into their operation by buying a portion or all of advisor’s existing RIA or practice, and then executing what is typically a long term contract to grow business. The advisor’s payout is generally 30%-40% with various incentives.

In this arrangement, advisors maintain their individual client relationships.  Advisors no longer have complete direct ownership, and in some cases, any ownership.  The roll-up typically offers a definitive and proprietary strategy for managing advisor’s clients’ money, and generally requires the advisor to adopt the “firm way” of doing business. 

Advisors operate exclusively under the brand of the roll-up RIA and the services and tools provided to the advisor are generally proprietary.  Advisors often operate from the firm’s office space and have access to support staff, who are employees of the roll-up firm. 

The roll-up may or may not be affiliated with a broker-dealer for commission business. If an advisor is interested in providing commission-based products, additional research is required to ensure the desired b/d service is available.      

Exit strategy is usually limited to the future sale of roll-up entity after the firm aggregates many advisor businesses and assets.

Roll-up RIAs generally seek advisors with $100mm or more of AUM, although less than that is becoming more common.

Now, let’s see how the typical roll-up model compares to DWA’s Independent Advisor model. 

Both service models can offer advisors the tools and resources they desire for their business; the DWA platform however, offers unmatched flexibility because we never limit advisors to a narrow set of services and products, and there are no proprietary products.  DWA understands that one size rarely fits all.  This is precisely why we developed our open architecture service model for advisors, which offers a broad selection of investment management choices, custodians, options for additional service providers, and integrated technology solutions. Advisors, and their clients, deserve nothing less.

The roll-up model offers advisors partial ownership in the parent company, but it also strips advisors of ownership of their individual client relationships, accounts and revenue streams.  DWA’s Independent Advisor model allows advisors to preserve ownership of their individual clients and accounts, and their practice.  With DWA’s service platform, you maintain your valuable relationships and assets, and we provide you with support solutions to help manage your practice and grow your business.  You also enjoy the systems and processes that enable advisors to experience significance efficiency.  You may choose where you work, see clients and how much or little you spend on your practice. Ultimately, the total DWA platform translates to helping you realize a much greater value for your practice, should you decide to sell all or part of your business.  

DWA’s independent advisor model is proving to be the platform of choice for advisors who are seeking to operate and develop a client-centered, independent practice.

« Older Entries