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The Great Unbundling of Financial Advisor Support

The days of the “take it or leave it” ecosystem are over and independent financial advisors should take full advantage of this budding trend.

By Keith Gregg

Just as cable providers have started to unbundle their packages, firms and vendors in the financial advisory space have also started to unbundle their offerings. The days of the “take it or leave it” ecosystem are over, and independent financial advisors should take full advantage of this budding trend.

Most independent broker/dealers claim to offer support for advisors when they really inflict bondage. If you lack choice in software or services providers, you are not free. If your broker/dealer doesn’t understand how to optimize the software or services it makes you use, that is not support. And if the collection of software and services that your b/d imposes is not helping your business thrive, that’s a serious problem.

Looking at the fee-based side of the industry, all-inclusive proprietary technology platforms that purport to solve all the business needs of RIAs often result in a different type of bondage. Those platforms can trap your firm into a contract for a bunch of tools that are either irrelevant for your practice or inferior to other tools you could find elsewhere.

How likely is it that the same software maker can excel at your financial planning, portfolio management, CRM, marketing and business administration needs?

DIY Dangers

On the other hand, dangers abound in the do-it-yourself route. Even the savviest business owner cannot stitch together the best toolkit from disparate sources or learn how to extract the most value from a platform they assemble themselves without a substantial commitment of resources.

Indeed, every minute spent researching and testing different software and services represents a huge opportunity cost for the vast majority of independent advisors. Since advisors are rightfully wary of squandering their time and money, all too often the DIYers settle for inefficient technology integrations or leave crucial gaps in their platforms that ultimately impede their growth rate.

For example, some advisors refrain from offering individual clients access to institutional-level alternative investments or don’t provide small and midsize businesses access to qualified retirement plans because they never could find the proper white-label vendors on their own.

Amazon Prime

What, then, is the balance, and what does the future of our industry look like? In many respects, the emerging advisor ecosystem will resemble Amazon Prime: A low-cost membership program that gives users access to music and video streaming, fast and free delivery of physical goods, and much more benefits, like, it will allow members to decide which, if any, add-ons they will purchase.

The future of financial advisor support will shift from “all or nothing” affiliation models to fintech-based, industry membership organizations that deliver affordable, à la carte platforms that ideally bring together everything independent advisors might need to succeed, from investment management, marketing and business administration to human resources benefits, office space and liability protection.

The technology and consumer behavioral changes that ushered in the Great Unbundling among traditional cable giants is at last beginning to pick up momentum in our industry. While our industry’s version of the Great Unbundling will likely entail disruption and uncertainty, it also promises to be a great positive for independent financial advisors over the long run.

Keith Gregg is the founder, chairman and CEO of Chalice Wealth Partners, a provider of technology and business solutions to independent wealth advisors.

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