Independent perspectives: Leaving for something more

Submitted by john.warren on October 28, 2020

Hi, I'm Chris Reedy, Business Development Managing Director for Schwab Advisor Services. Today, I'm joined by Mindy Diamond, President and CEO of Diamond Consultants, one of the wealth management industries leading recruiting and consulting firms. Welcome, Mindy.

Thank you for having me.

As you're speaking to RIAs today, things have changed quite a bit. We've seen huge growth in the RIA industry. What are you hearing from advisors about why they're making the decision to move from the wirehouse or IBD channel into the RIA channel?

Well, advisors' sentiment has really changed, and it's changed because people value freedom, flexibility, and control more than anything. People are driven by pushes and pulls, the pushes that are the frustrations, or things that are bothering them. And the bothers are usually about limitations, not being able to run the business that they want to. And the pulls are really being excited about becoming a business owner. Those are the major drivers.

You're really talking about control, and experience for the employees, and the clients. 

How is technology playing a role in that, either their ability to drive that control, or is there something that's changing besides that?

Yeah, I think that wirehouse advisors long thought of themselves as having access to open architecture.

And what that means is being able to, as an independent advisor, to really pull together best-in-class modern technology, and not being limited to the tech stack that a firm makes available to you, and the ability to customize that is real game-changer.

Do advisors' economics for themselves change across the models, and what new opportunities present themselves as they move to the RIA model?

Yeah. Well, the ability to control one's P&L is a tremendous driver. 

At the outset, it's excitement about better take-home economy, the notion of going from a payout in, say, the mid- to high-40s to take-home economy of, say, 60- to 65%. But the more these advisors dig in to pro forma P&Ls about what the business could look like as an independent, it really begins to see that the ability to add inorganic growth to the mix, to recruit, and acquire gives them the ability to expand margins, and, ultimately, really impact overall enterprise value.

So, you know, the great fear for an advisor when they're moving is ‘Will my clients follow me?' Talk about that? What do you tell advisors when… do you get asked that question? What do you say to them?

Portability is in direct response to how deep a relationship you have with clients. If you've always done right by them and have a relationship based in trust, and, most importantly, you're able to create a narrative in describing why you're going elsewhere that says to the client ‘I'm moving for your benefit. Here's what's in it for you.' most clients will have no problem in following.

Mindy, thank you. It was a pleasure. And I look forward to speaking with you again.

My pleasure, Chris. Thank you.

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