Wealth Management
The advisor landscape is shifting, with over 9,000 advisors changing firms in 2023, particularly within the RIA sector. Many advisors employed by RIAs—often non-owners earning a percentage of revenue or salary—are seeking greater autonomy, ownership opportunities, and better compensation.
The rise of large RIA aggregators and increasing M&A activity have contributed to advisor dissatisfaction, as firms focus on efficiency and growth at the expense of individual autonomy.
Advisors looking to transition have several paths, including joining another RIA, moving to a wirehouse or bank, launching their own firm, or affiliating with an independent broker-dealer. Each option balances control, compensation, and operational complexity, making careful planning essential for a successful transition.
Finsum: As the RIA industry consolidates, firms must innovate their advisor value propositions to retain talent and remain competitive.
Switching broker-dealers is a complex process, but with the right approach, it can be a transformative step for an advisor’s business.
- Legal considerations should be the first priority, as non-compete clauses and client ownership agreements can create hurdles if not addressed properly.
- Developing a detailed transition plan at least 90 days in advance is essential, ensuring advisors understand which accounts can move, which will remain, and how client data can be organized legally.
- Engaging staff early in the process prevents last-minute chaos and helps distribute responsibilities effectively.
- Advisors should also consider client communication strategies, ensuring a seamless transition that reassures clients and maintains trust.
Finsum: Ultimately, a well-executed move can enhance an advisor’s ability to serve clients while positioning their practice for long-term growth.
Planning for a financially secure retirement requires careful savings and multiple income streams to sustain one’s lifestyle after leaving the workforce. While IRAs, 401(k)s, and pensions are common sources of retirement income, annuities are another option to consider, that can suit investor looking to maximize income.
Annuities come in two main forms: immediate annuities, which provide guaranteed lifetime income starting right away, and deferred annuities, which allow funds to grow tax-deferred until withdrawals begin. Robbins argues that immediate annuities offer unique benefits due to mortality credits, helping those who live longer receive higher payouts.
Though some financial experts debate their effectiveness, annuities can provide a stable income stream, particularly when paired with Social Security and other investments.
FINSUM: For retirees seeking predictability in their finances, annuities may serve as a valuable tool for long-term financial security.
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Even the best-laid plans can go awry, and for advisors transitioning to a new firm, the risks increase when due diligence is rushed. A well-thought-out strategy can help avoid common pitfalls, especially when considering client loyalty and portability.
Clients generally follow advisors, not firms, but those who have moved before must present a compelling, client-centered rationale for another transition. The ability to replicate services, including alternative investments and loan terms, is also crucial, as logistical hurdles could deter clients from making the switch.
Legal risks, such as violating non-solicitation clauses or mishandling proprietary information, can lead to costly consequences, making legal counsel essential.
Finsum: While unexpected challenges may arise, advisors can minimize disruptions by learning from past transitions and following best practices.
Advisors evaluating a new firm should ask key questions to determine if it aligns with their long-term goals and client needs.
- First, understanding who owns the firm reveals its revenue structure, potential proprietary product requirements, and overall objectivity.
- Second, clarifying who owns the book of business is crucial, as it impacts client retention and succession planning in the event of a departure.
- Third, identifying the firm’s clearing firm or custodian helps advisors assess whether transitioning will be smooth or require significant operational changes.
Staying with a familiar platform can simplify the move, while switching may present challenges.
Finsum: By addressing these questions upfront, advisors can make informed decisions about their professional future.
DC plan sponsors must balance the need for steady lifetime income with participants’ desire to retain asset control. According to recent survey data, many individuals want guaranteed income but are reluctant to lock away their savings, making flexible solutions essential.
A guaranteed lifetime withdrawal benefit (GLWB) offers income security while allowing participants to maintain access to their funds, unlike traditional annuities that require upfront asset surrender.
While single premium immediate annuities (SPIAs) and qualified longevity annuity contracts (QLACs) provide reliable payouts, they often limit liquidity and growth potential. Self-insuring through investment withdrawals may work for those with substantial outside income but poses risks for the average retiree.
Finsum: Offering adaptable income solutions like the GLWB allows plan sponsors to support a wider range of participants without sacrificing financial stability.