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Breaking Free of Dated Ideologies

Why many advisors are still hanging on to the indoctrinated belief that there is no better way to serve their clients—and what they can do about it.

It might surprise you to hear that it is often the most productive and successful wirehouse advisors—usually those who serve the highest net worth clients—who feel the most torn by how best to serve them. It is their belief that these wealthier and more discerning clients are married to the wirehouses. After all, these same firms created a culture where advisors and their clients are indoctrinated in the belief that they are only successful because of the firm name and the brand cache that comes with it.

“The bureaucracy and hyper-vigilant compliance culture of my firm are killing me—but I feel like there is no better option,” said Linda, a top wirehouse advisor. “I’ve been here for my entire career. My clients trust the name and the cache that comes with it. I think that, unfortunately, I am stuck here.”

Linda and many advisors like her know that they could take a transition package to change firms, but think that all the major firms are pretty similar—culturally, financially and structurally—for better or for worse. Also, like many of her peers, Linda has no interest in going independent. And where else could she go if she is steeped in the notion that her clients will only trust a big brand name? 

The New Reality of Advisor-Client Relationships

It’s sad to me that people who have worked their entire professional lives to build spectacular businesses, always putting the best interests of clients first, now find themselves in a place where they feel there is no better option. And, with the word “fiduciary” at the top of everyone’s minds, it seems especially disingenuous that these advisors stay put, not because they believe that their firm is the best place to serve those clients, but because they are scared off by the belief that the only way to service a high-net-worth client is at a big firm.

What if the advisors and their clients aren’t necessarily right? What if they are simply naïve to how the industry has evolved and what new possibilities exist?

Let’s look at it this way:

  • Product and platform are commodities. Anything that an advisor needs to access to meet the needs of clients can be obtained no matter where the advisor practices. The true definition of open architecture means the big firms no longer have the market cornered when it comes to custom, best-in-class solutions.
  • Technology is certainly good at the big firms, but not the best out there. There have been advances by third-party providers from Silicon Valley that would take years for a larger firm to even consider, let alone develop on their own.
  • Regional firms like Raymond James, boutique shops like First Republic Private Wealth Management, William Blair, or any one of the plethora of models in between, grant advisors a fresh start. At such firms, advisors can have greater freedom, flexibility and control over their business, yet still retain some modicum of the big brand feel they’ve grown accustomed to. It’s models like these that are changing the minds of advisors who service HNW clients. They’re being blown away by capabilities they had no idea existed outside the wirehouse world.

There are a few additional new realities that Linda and other advisors like her need to keep in mind:

  • Certainly, while there are many similarities between each of the big firms, they are not all the same. It’s important to vet each of them individually before jumping to conclusions. 
  • As for the clients, they have become far more sophisticated when it comes to who they trust with their financial future. Ultimately, most advisors have found that they’ve built a bond that extends far beyond the brand name printed on their business card.

Inertia often takes hold when you are held hostage by a lack of knowledge; that is, living under the guise of old beliefs. The reality is that things do change—and certainly, we’ve seen a lion’s share of change in the past year alone. By expanding your knowledge and understanding, you challenge and release the old thoughts and see the world for what it really is at this point in time, not what it was once believed to be.

So if you’re feeling stuck in old beliefs, the best antidote is to get educated about how the landscape has evolved and see what it looks like elsewhere. This exercise will help you to break free of myopic thoughts, and the net result will be one of two things: either you will identify an alternative firm or model that allows you to better service your clients, or you’ll wind up staying where you are with a renewed and revitalized perspective—one born of greater knowledge and acceptance. That is, you’ll feel better about where you are because you did your due diligence and can say with confidence that you’re at the very best place for both you and your clients.

Mindy Diamond is President & CEO of Diamond Consultants in Morristown, N.J., a nationally recognized boutique search and consulting firm in the financial services industry.

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