Equitable’s wealth management business, Equitable Advisors, has become such a meaningful part of the company’s overall earnings that it recently started breaking it out as its own reporting segment. Equitable Advisors had about 4,300 advisors and $72.8 billion in assets under advisement as of May 17, and the firm has big growth plans for the segment.
During its May investor day, Equitable laid out plans to grow the wealth management group’s post-tax earnings from $101 million at the end of 2022 to $200 million by 2027, a 15% compound annual growth rate.
The company also hopes to double its wealth advisor head count, currently at about 700, by developing generalist advisors, and increase advisor productivity by 4-5% in the next four years. The firm defines “wealth advisors” as those with $25 million or more in client assets and have integrated a recurring fee-based model into their practices.
“This is a strategic segment that drives high productivity with a clear path to future growth,” said Nick Lane, president of Equitable, during the investor day presentation. “Wealth planners are the highest performing advisor segment, three times more productive than non-wealth planners, and this group accounts for about two-thirds of our investment broker/dealer flows.”
David Karr, chairman of Equitable Advisors, said the firm has been focused on hiring more experienced advisors as well as wealth ones. The firm has historically gone after people new to the industry and trained them.
“As a result of doing that, our average advisor is 47 years old, versus the industry, which is quite a bit older,” Karr said. “That's been a meaningful part of our growth story and I think continues to be an important part of our growth story. At the same time, we recognize the need to bring on experienced advisors in order to continue to grow our wealth management business, continue to scale and enable advisors to take advantage of the platform we’ve built.”
Karr said the firm has a centralized virtual training program that’s delivered to both rookie and experienced advisors, which is supplemented by localized work that can take place in person.
The firm has also taken 1,500 advisors through a broad-based training on holistic life planning, which teaches them how to engage their clients on deeper and more meaningful conversations about their lives and how that relates to their finances. That program focuses on the advisor’s personal growth.
That broad-based training serves as a precursor to its life planning coaching credential, which Equitable launched in May 2022 with Columbia University. This is an immersive training that involves traveling to New York, where candidates take part in one-on-one coaching. By August, about 225 advisors will have graduated from the program, which takes over 40 hours to complete.
“It's very scientific, it's very analytical, but it is also very much a coaching program on really how to understand your clients and the types of questions and how to engage your clients so that they share really what's most important to them, and you can help them address those concerns and needs,” Karr said.
Equitable is also doubling down on its “supported independence” model. For the most part, Equitable advisors operate as independent contractors. New advisors come in as W2 employees for the first 36 months as they transition into the business. The firm will aid advisors in however they choose to build their practice and serve their clients.
The firm has a partnership with LPL Financial for custody, clearing and middle-office functions on the broker/dealer and RIA side, and that platform is open architecture.
At the same time, Karr said, with 80 locations around the country, Equitable has a much larger support infrastructure—including training, marketing, licensing and compliance—than other independent firms.
Equitable will also help advisors with real estate, if they don’t already have their own space. Advisors can move into its corporate space, and the firm will help with operational oversight, such as getting computers and phones set up.
A large portion of Equitable’s wealth management business is focused on 403(b) plans, the retirement plans for K-12 teachers. The firm says it has $112 billion in these retirement plans assets, with 1,100 of its 4,300 advisors specializing in the space.
But Karr said the firm’s move toward wealth management does not indicate a shift away from teachers.
“We are still very much committed to the teacher's market," he said. "It actually also helps us in the long term better serve those clients as well, because many of our advisors that focus on that marketplace have expanded their practices well into the wealth management space and really focus on all the assets of their teacher clients, not just their retirement assets.”