The Modern Advisor

The Rise of the Advisor-Entrepreneur

By :
Runik Mehrotra
Advisors are taking control of their practices and moving away from wirehouses. We're seeing the rise of a new type of advisor, the Advisor-Entrepreneur.

The Movement

The rise of technology and global connectedness has uprooted decades-old infrastructure in the wealth management industry. Just 20 years ago, virtually all financial advice was delivered by advisors at large institutions, wirehouses, and broker-dealers. Today, financial advisors and planners are declaring independence. 

Independent advisory assets have grown every year, and the tools and people servicing this segment have exploded. More advisors are following every month, getting a better deal for themselves and their clients. They’ve realized that becoming an independent advisor allows them to deliver the best financial advice, especially in uncertain times.

Old barriers to independence

Until recently, the cost of infrastructure and support costs inhibited most financial advisors from operating outside of wirehouses and broker-dealers. While advisors may have hated the payout matrix of large institutional employers like Merrill Lynch and Morgan Stanley, there were few alternatives for advisors.

A wirehouse job provides stability, but often, convenience is its real appeal. If you’re part of a well-established firm, you likely have an in-house compliance team that can recite Reg BI requirements backward and forwards. You have an on-site IT team that keeps your hardware humming and your software up-to-date. 

New tools, new options

Today, technology has brought down the barriers that once stood between financial advisors and independence. There are innumerable consultants who can advise on compliance on retainer or on an hourly basis. The same is true for IT consulting, of course, and smaller one- or two-person shops can bring on other types of consultants as needed.

Setting up an LLC may require some legal assistance, but today it’s easier than it’s ever been. Businesses like Foreside (formerly NCS Regulatory Compliance) and RIA in a Box make once insurmountable challenges like compliance and SEC registration simpler: What once required a team of experts can now be easily handled by consultants or software. 

More ways to run a business 

Yesterday’s advisors didn’t have a fraction of the resources that today’s financial professionals do. The mechanics of the classic financial advisor originated in the pre-digital era.  Advisors could pick actively managed mutual funds and third-party equity managers, but tools and resources were limited. One firm operated pretty much the same as another firm; the time, effort, and stress of independence wouldn’t let advisors offer better service or deliver better results. 

Moreover, wirehouses and similar large firms were typically the best sources of inbound client leads — the world was less connected, so discovering potential clients required resources small shops were unlikely to possess. For decades, the incentives of independence were too small to be worth the hassle. 

The rise of the modern advisor   

Today, independent financial advisors have easy and affordable access to all the tools that they need. There are dozens of options available, and newly independent financial advisors are bound to receive a pleasant surprise. Many new tools don’t just match the capabilities of legacy systems, they far exceed them. Proprietary systems are rarely updated and generally finicky, but they grow so familiar that institutional inertia precludes change. If the lead generation system at your wirehouse is full of junk data or its client portal is sluggish, you’ll spend too much time managing systems when you should be managing money. With an independent RIA, everything changes.

Financial advisors who go independent will find themselves working with cutting-edge technology: artificial intelligence, streamlined interfaces, cloud infrastructure, and more. Cloud-based CRMs make client tracking simpler, and accelerates the processes of lead generation and conversion. Artificial intelligence can automate many rebalancing tasks and allows greater portfolio personalization — With new financial planning tools, complete customization is no longer a nice-to-have. Now, it’s essential. Simply put, independent RIAs can work faster, work smarter, and work better.

The best financial advisors have had enough. They want more time and better connection with clients instead of office politics and management-imposed quotas. They want the freedom and flexibility afforded by new technologies. And they want to receive their fair portion of the value they create. 

Advisors are exiting their old firms in droves. Even the oldest and most traditional wirehouses recognize that change has arrived: Major firms are eliminating “penalty box” production barriers to keep their advisors from leaving en masse. Some financial advisors will remain with onboard at the giant firms, but the true innovators, the trailblazers of personal finance, are going independent. 


Sign up to keep up with new updates and content!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
ViseFeatures
1 World Trade Center, Suite 84A
New York, NY 10007
Legal / Privacy Policy
Copyright © 2020 Vise, Inc.. All Rights Reserved

Vise AI Advisors, LLC is an investment adviser in New York, New York. Vise AI Advisors, LLC is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Vise AI Advisors, LLC only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Vise AI Advisors, LLC’s current written disclosure brochure filed with the SEC which discusses among other things, Vise AI Advisors, LLC’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Vise AI Advisors, LLC’s or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with Vise AI Advisors, LLC with respect to any linked site or its sponsor, unless expressly stated by Vise AI Advisors, LLC. Any such information, products or sites have not necessarily been reviewed by Vise AI Advisors, LLC and are provided or maintained by third parties over whom Vise AI Advisors, LLC exercises no control. Vise AI Advisors, LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

Any reproduction or distribution of this website, as a whole or in part, or the disclosure of the contents hereof, without the prior written consent of Vise AI Advisors, LLC is prohibited.

Monte Carlo simulations have material limitations. Market movements may be more or less extreme and more or less frequent than those that occur in the model. Certain asset classes and investments have shorter histories than others and may not be as reliable. Market Events and other factors may influence the reliability of the potential outcomes.

All investment strategies have the potential or profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will either be suitable or profitable for a client’s portfolio. There are no assurances that the portfolio will match or outperform any particular benchmark.

Back-tested performance results have inherent limitations, particularly in the fact that these results do not represent actual trading and may not reflect the impact that material economic and market factors might have placed on the advisor’s decision-making if the advisor were actually managing the clients’ money.

Nothing provided herein constitutes tax advice. Individuals should seek the advise of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or any other jurisdiction.