Weekend Reading for Financial Planners (May 22-23)

Weekend Reading for Financial Planners (May 22-23)

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that ‘upstart’ RIA custodian Altruist has raised a huge $50M of fresh investment capital to fuel its ongoing growth, even as questions arise as to how quickly the platform is actually growing and whether Altruist is ultimately really an RIA custodian, or a platform TAMP, or a technology firm that overlays custodial services… though arguably Altruist’s ongoing growth (and ability to attract investor capital to fuel that growth) despite the murkiness of its ‘categorization’ may simply highlight how the traditional dividing lines between each are continuing to blur as advisors expect more and more from their advisor platforms (whatever they may be labeled)?

Also in the industry news this week are a number of interesting studies:

  • The latest Charles Schwab “Modern Wealth” survey finds that consumers have substantively reigned back what it takes to be “wealthy” and “financially happy” as expectations adjust in a post-pandemic world
  • A T. Rowe Price study highlights how next generation clients are interested in financial advice, but want to talk about different topics (that are more relevant to them) and prefer flat- and subscription fees over the AUM model when seeking a financial advisor

From there, we have several interesting articles on mergers and acquisitions and advisory firm valuations:

  • Why now is a good time for prospective sellers to capitalize on the strong buying demand for RIAs (and how to go about doing so)
  • How often the best way to increase an advisory firm’s valuation is to simplify and do less (which makes it easier for an acquirer to quickly integrate the firm and thus be willing to pay more)
  • As large advisory firms look more like platforms and platforms provide more advisor-support services, the lines between “selling” and “being recruited” are beginning to blur

We’ve also included a number of articles on financial advisor marketing:

  • How to apply Donald Miller’s “StoryBrand” approach to show the value of financial planning to prospects (by highlight how the financial planning process will transform them)
  • Why advancing technology is making it easier for any advisory firm to become a “storyteller” using online tools for easy-to-create videos
  • The benefit of marketing an advisory firm’s services (i.e., actually focusing on the services the firm will provide) over simply trying to highlight its intangible value

We wrap up with three final articles, all around the theme of how even “small” advisory firms can be very financially successful:

  • Why advisor platforms struggle to be profitable supporting advisors until they’re at least $100M of AUM but advisors themselves can be wildly profitable at less than half that amount of AUM
  • The importance of doing an “audit” on your own client roster to identify who are the really profitable clients (and those who aren’t)
  • How growth usually does not lead to economies of scale in advisory firms, which means greater profitability is not about adding more clients in the hopes that margins improve, but about getting smaller and more focused instead

Enjoy the ‘light’ reading!

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