Inverse Grid: Is Your Company Offering Enough Value?

Financial Advisors


Overall, advisors care deeply about their clients and consider every decision through the lens of how to best serve their clients. But that’s not to say they don’t mind paying. Wealth management is a business, after all.

Advisors typically value payouts as a composite final number, or “how much of the revenue I generate goes into my pocket each month?” But now more than ever, advisors are paying close attention to whether a company’s revenue share is fair.

Most advisors can accurately describe the services they provide to guarantee the rates they charge. Examples include financial planning, investment management, safekeeping of assets, and holistic financial advice. What exactly does the company do to ensure that it retains more than half of its revenue in some cases? Is the cost worth it?

At full disclosure, this article cannot definitively answer that question. By understandingAdvisors can make more informed decisions about whether their current company or platform is the best home for their practice.

For example, Wirehouse advisors typically describe payments in the 40% to 50% range. The logic is that the firm itself keeps between 50% and 60% of the revenue an advisor generates. Not just telecommunications companies. Nearly every company and platform has a set of costs. Advisors should always evaluate whether they are providing enough value to justify the cost.

So what are some areas where companies can provide value to their advisors? Here are the six most common:

  1. investment platform – You are not given access to a myriad of investment managers and solutions. Deep relationships and due diligence frameworks are required to ensure that all investment products are properly vetted. Most traditional companies manage investment platforms for advisors. In other words, we reduce the entire universe of potential products and solutions to a more limited, pre-approved menu that Advisors are free to purchase. This is a common sense approach that works for most advisors. (As an anecdote, few traditional corporate advisors complain about investment platforms.)
  2. technology stack – Advisors take it for granted that they have Advisor Desktop to log in to when they come to work each morning. Its desktop is filled with a variety of integrated software, from planning tools and rebalancing programs to performance reporting systems.
  3. brand – This is where we get into some of the softer line items. Wirehouse, for example, boasts some of the most sophisticated and respected brands on the street, which can be very valuable to some of its clients and advisors. In some cases, it may do more harm than good.
  4. subject matter expertise and ancillary services – Many advisors are CFPs or have highly qualified team members, but there are more advanced and specialized client needs that advisors are asked to solve. A corporate advanced planning department or a roster of estate planning attorneys, charitable giving advisors, and trust professionals can serve as an extension of your team of advisors.
  5. Oversight of compliance – This is every advisor’s favorite punching bag. However, it is an important and necessary factor for a successful wealth management business. Compliance aims not only to monitor bad behavior, but also to provide guardrails where necessary and protect advisors and clients. You can have the peace of mind that you will be dealt with should a disaster occur. Almost all traditional firms treat compliance as part of a suite of services, and even many independent firms offer advisors solutions to solve compliance issues.
  6. scaffolding and support – Many advisors share that the day-to-day support they receive is well worth the expense. And definitely worth knowing if something breaks it will be fixed. there is. But not all supports are created equal. How quickly and efficiently are requests processed? Are there escalation points within the company that advisors can consult if necessary? , do you have a team with boots on the field?

So understanding the basic components of what an advisor “pays for” leaves questions. Are these products or services worth the revenue the company charges?The answer depends on two key factors:

  1. How well does your company deliver each?

Having the above resources and capabilities is often not enough. They must be delivered with excellence. For example, virtually every company and platform has a tech stack, but does it work well? Is it sophisticated enough to keep up with client demands? Do they keep innovating?

  1. How dependent are you and your clients on each other?

For example, your company may have the world’s largest alternative investment platform, but having no alternative business at all influences opinions about whether the company offers enough value. Not likely. Or think big brand names. Is it important to your clients? Are you allocating investments that otherwise wouldn’t be accessible? Are you leveraging special techniques? These are all important considerations.

Understanding the reverse grid can help you assess whether your current company or platform is providing enough value for your company’s keep. Ultimately, it all depends on each advisor’s unique needs.

Jason Diamond is a Vice President and Senior Consultant at Diamond Consultants. Diamond Consultants, based in Morristown, New Jersey, is a nationally recognized recruitment and consulting firm focused on serving financial advisors, independent business owners, and financial services firms.



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