Displaying items by tag: wealth management

Advisors nearing retirement often focus solely on finding the right successor, but switching broker-dealers can be a powerful strategy for a smoother transition. Aligning with a forward-thinking broker-dealer can attract a larger pool of potential buyers by offering advanced technology, competitive compensation, and broader recruitment options. 

This move can also position advisors to achieve a higher valuation for their practice, making the transition more financially rewarding. Though it may seem like additional effort late in a career, joining a progressive firm can simplify the process and enhance long-term outcomes. 

Succession planning isn’t just about finding a partner; it’s also about creating the optimal environment for a successful exit. Financial advisors should consider how changing broker-dealers could unlock new opportunities for a rewarding and seamless transition.

Finsum: As we approach one of the largest transition periods in American financial history, consider how your future broker can aid in this transition and provide additional value to your business. 

Parkwoods Wealth Partners LLC has recently launched a new platform aiming to support registered investment advisors (RIAs) with their growth and succession planning. The platform has integrated its first partner, FMF&E Wealth Management, a Syracuse-based RIA managing approximately $358 million in assets. 

Founded by industry experts including Al Sears and Ed Edwin, who have deep connections with Dimensional Fund Advisors (DFA), and Chris Gardner, formerly of FMF&E, Parkwoods plans to scale nationally. The firm is designed to help advisors maintain their independence while benefiting from centralized services like compliance and trading. 

This model provides a pathway for long-term continuity and succession, focusing on maintaining professional autonomy. Parkwoods is actively looking to partner with RIAs that value evidence-based investing and a client-focused approach.

Finsum: Leveraging all the tools at your disposal can allow you to optimize your succession plan. 

In a blog post, Bill St. Louis, FINRA’s head of enforcement, said that more Reg BI cases are ‘in the pipeline’ and that ‘disciplinary actions have been increasing’. He added that these cases in the pipeline involve Form CSR, excessive trading, complex products, and variable annuities. 

Two recent enforcement actions involved the use of social media influencers for customer acquisition. FINRA fined Cobra Trading $200,000 for paying social media influencers with larger followings to promote the firm. According to the agency, these promotional posts made false claims and were not fair or balanced. Similarly, M1 Finance was fined $850,000 for social media posts made by influencers on the firm’s behalf that violated FINRA’s guidelines. 

Given that a growing share of the public now gets news and information about investments from social media, the agency is conducting regular sweeps. Firms are also required to conduct a consolidated audit trail. According to St. Louis, most firms are in compliance with these reporting obligations, but some audit cases are also in the pipeline. 

Finsum: FINRA is stepping up enforcement of Reg Bi. Two recent enforcement actions were due to firms improperly using social media for promotion.  

Herbers & Co. conducted a survey of investors with more than $250,000 in assets and advisors to identify whether advisors’ offerings are effectively meeting clients’ needs. Among the findings, the biggest takeaway is that there is some misalignment between advisors and clients in certain areas. 

One change from the survey, compared to previous years, is that 90% of clients said effective tax planning is their highest priority. Previously, clients cited retirement, investment management, and cash flow as top concerns. Currently, only 73% of wealth management firms offer tax planning services. For advisors, it’s an opportunity to offer more comprehensive planning solutions that encompass cash flow, education, estate planning, investments, retirement planning, and tax management. 

Many wealth management firms self-identify as offering comprehensive planning, yet only 31% actually do so. This means planning for a client’s specific needs, such as business planning for business owners. 

The survey also revealed that a portion of clients are interested in alternative investments, including cryptocurrencies. The challenge for advisors is that most firms currently don’t offer advice in these areas. However, they are likely to get questions from clients, especially with the introduction of crypto ETFs backed by asset managers like Blackrock and Fidelity. Advisors should proactively prepare for these conversations. 

Finsum: A survey of clients and wealth management firms found that there are some areas in which advisors can do a better job of understanding and meeting client needs.

Summit Financial was founded in 1982 as an independent firm. Over the last 4 years, assets under management grew from $3 billion to over $10 billion as it aggressively recruited talent from wirehouses and other firms. Ed Friedman, the director of business development and growth at Summit, shared some insights on what has driven the firm’s recent success.

The biggest factor is creating a culture that allows advisors to be fiduciaries, grow their own businesses, and have a meaningful stake in the firm’s long-term success. Friedman stresses that clients are ultimately loyal to an advisor and not a company. 

Additionally, advisors at independent firms have more control over their destinies. In contrast, an advisor's fate at a wirehouse or larger institution can be affected by unrelated factors. For instance, many brokers at Merrill Lynch had their equity wiped out in 2008 when it had to be bailed out by Bank of America. Similarly, advisors at First Republic were impacted by the crisis last year, despite the wealth management unit’s strength. 

Friedman also attributes the acceleration in growth to bringing in professional management. This has allowed advisors to focus on clients, prospecting, and financial planning, while other matters such as compliance, backoffice tasks, and administration are handled by the firm. 

Finsum: Summit Financial is more than 40 years old. Yet, the RIA’s growth has exploded in recent years as it has brought in professional management and found success with its independent-hybrid model.