Registered Rep: What attracted you to Fusion?
Philip Palaveev: First of all, the fantastic group of advisors Fusion currently has — some of whom were my clients at Moss Adams — many of whom have become friends. Second, the great partner and friend I find in Stuart [Silverman, CEO] — going to Fusion does feel a little bit like returning home. Last, but not least, the opportunity to grow and have a dramatic impact on how the industry thinks of advisor affiliation and advisory organizations. I am a bit vain, too, after all.
RR: Why is Fusion looking to expand into the RIA space?
PP: Fusion's focus is really on the advisor. How the advisor is regulated is just a nuance. We want to work with independent-business-owner advisors, and it doesn't matter to us if they are RIAs, affiliated with a broker/dealer or both. I think this has always been Fusion's philosophy.
RR: Who is Fusion's target advisor or RIA?
PP: Entrepreneurs who have realized that they need to manage their practices, and who have come to one of the crossroads in building their businesses. Also, advisors who have a tough time catching the attention or the best resources of their infrastructure partners. If I had to quantify it, I would say advisors with anywhere from $200,000 to $3 million in revenue, but it is really not about the revenue — it is about the underlying business, culture and client philosophy.
RR: Do you see any major shifts happening in the RIA industry in the next few years?
PP: The talent shortage will be the number one issue. Related to it, the transition of ownership to the second generation will be a defining moment for many firms. From a macro perspective, new service firms will come to challenge the existing custodians and perhaps the custodial model of service as well.
RR: Do you think firms like Merrill Lynch and other wirehouses will become big players in the RIA custodian business?
PP: I am convinced that Wall Street firms will participate in this market, but I don't know if it will necessarily be in the custody model — at least not in its current form.
RR: What about LPL?
PP: It is a growing, evolving, innovative and ambitious company that already is a formidable force in the advisory industry. I think, overall, the industry only benefits with the addition of every new competitor that brings more services, new technology and new business models.