Image alt tag

Error!

There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.

Error!

We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Error!

We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your LordAbbett.com password was successully updated. This page will be refreshed after 3 seconds.

OK

 

Practice Management

As the RIA industry consolidates and the distinction between advisors and broker/dealers blurs, what does it mean to be independent?

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).
 

Is "independence" dead?

A trio of top custodial executives discussing big trends for the RIA sector downplayed the term—at least as a marketing advantage—during a panel session at the 2014 MarketCounsel summit in Las Vegas in December.

“I don't know if we can keep defining ourselves as independent," said Fidelity Institutional Wealth Services president Mike Durbin. "What is independence? We need to continue to define our relevance."

Schwab Advisor Services head Bernie Clark echoed the concern. "Independence may not be enough to sell [the RIA offering] in the future," he said.

Forecast: More RIA Takeovers Ahead
One challenge: As independent advice becomes more valuable, larger players are moving in on the space, buying out firms—as in Boston Private Bank & Trust's blockbuster $60 million deal for Banyan Partners in July—thereby eliminating that independence.

"I think you will see a wirehouse buy a big RIA within the next 10 years," predicted the panel's third member, Pershing Advisor Solutions CEO Mark Tibergien.

Such deal making will raise a question, he noted: "Are you talking about independence of ownership or independence of thought?"

Switch to Fiduciary?
Like other speakers over the course of the three-day event, the custodial executives suggested a fiduciary standard as a differentiating factor—even saying they intended to work together to boost awareness and education, which Clark said were "among our biggest challenges."

Even the phrase "investment advisor"—once an indicator that a planner was governed by the 1940 Investment Advisers Act—has lost its currency as a signifier to consumers, executives lamented.

"The word ‘advisor’ has been purloined" by wirehouse brokers, Tibergien said. "We need to stand up to that abuse of the language.

When someone is becoming an RIA, they are fundamentally changing their business models… becoming client advocates instead of product advocates," Tibergien added.

The growing number of RIAs over time has, in itself, become a branding challenge, noted one attendee.

"It used to be easy to say, 'I'm independent, I'm objective'—that was your value proposition," says Halbert Hargrove CEO Russ Hill, who cites his four-digit CFP ID number as proof of his longevity in the industry.

"I don't think that's enough anymore," he added. "We're all going to have to figure out how to explain why we're better than everyone else."

- Rachel F. Elson 


RELATED CONTENT

Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field