business model for investment advisors

Guide to Investment Advisory Business Models

AICPA MEMBER

The content in the CPA's Guide to Investment Advisory Business Models and accompanying resources is not intended as legal advice. CPAs with a PFP practice should consult legal or other appropriate professional counsel. As the range of financial topics clients wish to discuss expands, two questions have become common and important.

When does the financial advice I provide in my CPA practice require registration?

Should I become an investment adviser?

This guide will help you answer these questions along with

Download the Guide to Investment Advisory Business Models

File name: cpa-guide-investment.pdf

Reserved for AICPA® & CIMA® Members

Already a member of the aicpa or cima, log in with your account, not a member of the aicpa or cima, mentioned in this article, related content.

This site is brought to you by the Association of International Certified Professional Accountants, the global voice of the accounting and finance profession, founded by the American Institute of CPAs and The Chartered Institute of Management Accountants.

CA Do Not Sell or Share My Personal Information

• Business Ideas
• Registered Agents

How to Start an Investment Advisory Business in 14 Steps (In-Depth Guide)

Updated:   April 12, 2024

BusinessGuru.co is reader-supported. When you buy through links on my site, we may earn an affiliate commission. Learn more

The investment advisory services industry is on the rise. It’s expected to grow at a compound annual growth rate (CAGR) of over 5.5% between 2023 and 2032. With more individuals and businesses seeking professional guidance for their investments, the demand for financial advisors continues to rise.

Whether you dream of running a boutique financial planning firm or building a national wealth management company, now is a good time to start.

This guide will walk you through how to start an investment advisory business. Topics include market research, competitive analysis, marketing, registering an EIN, obtaining business insurance, and more. Here’s everything to know to start your own financial planning firm.

1. Conduct Investment Advisory Market Research

Thorough market research is imperative when starting an investment advisory firm. It provides insights into industry trends, competitive landscapes, target demographics, startup costs, profitability benchmarks, and growth opportunities.

Some details you’ll learn through market research as a financial advisor include:

• Top specializations are retirement planning, wealth management, and portfolio management. Other popular niches include financial planning, estate planning , tax advisory, and insurance services.
• When choosing a niche, also consider target demographics. For example, women now control over 50% of personal wealth in the U.S. representing a major customer segment.
• The financial barriers to launching an RIA firm have also lowered considerably. Startup costs can range from as little as $2,000 for a solo practice to $75,000 or more for larger firms.
• Ongoing overhead expenses are estimated between $40,000 to $280,000 based on company size and services offered.
• Higher revenue potential exists in wealth management and portfolio management niches.

With robust market growth and ideal customer targeting, the financial advisor business industry presents a compelling opportunity for aspiring entrepreneurs. Conducting in-depth market analysis can further help secure a foothold.

2. Analyze the Competition

Understanding the competitive landscape is vital for positioning your advisory firm. Competitive analysis will help develop a thorough financial advisor business plan. Conduct competitor analysis across these key areas:

• Research which investment services local competitors provide. Identify service gaps you could fill.
• Evaluate the target demographics and assets under management (AUM) of competitors using free online tools like BrightScope .
• Establish the average and median AUM figures in your market. Identify any underserved niche demographics you can target.
• Consider private lending services that clients may require analysis with.
• Most registered investment advisors (RIAs) generate revenue through asset-based fees, fixed fees, hourly fees, or retainer fees.
• Benchmark what fee ranges and models competitors follow for the services you will provide using the Kitces financial planning fee survey. This will help you develop competitive pricing.
• A key differentiator will be your ability to provide solid risk-adjusted returns.
• Use sites like Advisory World to compare investment returns of active advisors across 1, 3, and 5-year periods. Make your performance benchmarks accordingly.
• Scan online listings, website pages, content assets, reviews, and social media handles of top firms.
• Gauge what it will take to match or exceed their digital footprint and marketing content through clear unique value propositions and positioning.

The competitor analysis drill equips advisors with intelligence for strategic decision-making around offerings, niches, pricing models, and marketing tactics when starting their RIA firm. It forms the blueprint for long-term positioning and growth.

3. Costs to Start an Investment Advisory Business

When starting an RIA firm, advisors must budget for both initial and recurring expenses. Here is a comprehensive breakdown:

Startup Costs

• Business Formation: Forming a legal business entity like an LLC will cost $500 – $2,000 including state registration fees and licensing.
• Regulatory Registration: Registering as an investment advisor with the SEC costs about $3,000 – $5,000 while state registrations average $700.
• Office Space & Supplies: Leasing basic office space will range from $1,000 – $5,000 per month based on location and size.
• Legal & Compliance Setup: Engaging lawyers to review operating agreements, ensure SEC compliance protocols, and develop client contracts can cost between $3,000 – $10,000 initially.
• Salaries: Hiring even one full-time support staff like an office administrator, broker , or para-planner may cost $45,000 – $60,000 per year.
• Insurance Plans: E&O insurance is essential, costing on average $2,000 – $7,000 annually depending on coverage.
• Marketing: An initial year of inbound marketing via a company website, online directory listings, content, and SEO can range from $15,000 – $30,000 or more. Ongoing marketing is factored into recurring costs.

In total, starting an RIA firm may cost between $40,000 – $280,000+ depending on staff, office space, desired scale, and other elections.

Ongoing Costs

• Marketing Activities: Blogging, SEO services, PPC ads, retargeting campaigns, social media – $2,400 – $4,800 monthly
• Office Rent & Utilities: Depending on commercial lease terms – $5,000+ per month
• Staff Payroll Including Taxes & Benefits: Employee salaries + 20% – 30% for payroll taxes, health plans, other benefits
• Technology, Tools & Software: CRMs, financial planning tools, portfolio analytics, data aggregation – $300 – $1,500 monthly
• Admin, Operations, Finance: Phone systems, tax prep services, bookkeeping, product samples or client gifts/retainers – $2,500+ per month
• Regulatory Fees: Annual SEC fees, state notice filings, licensing renewals – $1,500+ yearly

Ongoing costs for a small RIA firm generally start around $40,000 per annum while larger firms may incur over $250,000+ in annual overhead expenses. The payoff is building an independent, scalable, and highly profitable advisory business.

4. Form a Legal Business Entity

When establishing an investment advisory firm, the legal structure carries major implications for liability, taxation, and business continuity. The four primary options—sole proprietorship, partnership, S-corp, and LLC—have unique pros and cons for RIAs.

Sole Proprietorship

The simplest and most affordable business model in the financial services industry is sole proprietorship. However, the owner assumes unlimited personal liability for company debts, losses, and legal issues of your own firm. Tax reporting is also meshed with personal returns. Only suited for single-employee operations with no growth ambitions.

General & Limited Partnerships

Involve two or more co-owners in a jointly operated advisory firm. A general partnership has equal participation in management while a limited partnership designates general partners overseeing operations. Unlimited personal liability still applies to general partners. Intricate profit/loss sharing arrangements also get complex fast with multiple partners.

S-Corporation

S-corp status offers RIAs liability protection and allows income/losses to pass to shareholders’ tax returns. Save for payroll taxes. Stringent IRS rules around ownership structure and shareholder compensation make scalability a challenge. Extensive record-keeping requirement is a downside for entrepreneurs.

Limited Liability Company (LLC)

The LLC structure uniquely combines the pass-through taxation benefits of a partnership with the liability protections of a corporation. Advisors’ assets remain shielded from any business lawsuits or claims, encouraging entrepreneurial risk-taking. Operationally, LLCs also impose lesser regulations compared to S-corps.

5. Register Your Business For Taxes

An Employer Identification Number (EIN) serves as a business’s tax ID number with the IRS for tax reporting and payment obligations. All investment advisory firms must acquire an EIN within the first few months of founding their LLC or corporation entity.

Obtaining an EIN is free and can be instantly processed online via the IRS website . Simply navigate to the EIN Assistant page and respond to a short Q&A about your entity structure and business activities. Upon submission of the form, your EIN is immediately displayed and emailed to you.

Additionally, investment advisors with plans to sell information products, workshops, or other taxable items must register with relevant state agencies to collect and remit sales tax. The process entails submitting details about your business products/services along with EIN.

Obtain an EIN to get a seller’s permit, sales tax ID number, and certificate of authority to collect statewide sales tax rates.

Most states do not charge registration fees. However, you must file regular sales tax returns to avoid penalties. Consulting a tax professional can help streamline multi-state sales tax compliance requirements as your RIA firm’s offerings and client base expand.

6. Setup Your Accounting

Comprehensive financial planning requires a little financial planning of your own. Robust accounting practices are non-negotiable for investment advisory firms. As RIAs directly handle client assets and investments, meticulous record-keeping, reporting, and auditing protections must be implemented from inception.

Open a Business Bank Account

Begin by establishing separate business banking and credit card accounts to avoid commingling personal and company funds which can trigger IRS red flags. Apply for credit cards designed specifically for small businesses that offer higher limits based on your EIN and entity history rather than personal credit scores.

Accounting Software

Next, integrate cloud accounting software like QuickBooks to automate income/expense tracking, generate financial statements, send client invoices, facilitate payments, and sync data across bank/credit card accounts. Their user-friendly UI helps advisors with no accounting background easily manage finances.

Hire an Accountant

Bookkeeping services are also vital for reconciling transactions, ensuring balances match actual bank statements, providing editable ledgers for taxes, and producing quarterly profit/loss statements. Expect to invest at least 4-6 hours monthly for robust bookkeeping at approximately $50 – $150 per hour.

7. Obtain Licenses and Permits

Before accepting any clients or managing assets, aspiring RIAs must register as investment advisors and obtain all necessary regulatory approvals. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

For RIAs managing $100 million in assets or working with mutual funds, Securities and Exchange Commission registration in the financial planning profession is mandatory. This involves submitting Form ADV paperwork, appointing a chief compliance officer, putting investor protection protocols in place, and usually hiring an independent auditing firm.

Smaller RIAs with $100 million assets under management (AUM) must register through the state they are headquartered in. Form ADV must still be filed but directly with state securities regulators.

For both SEC and state-registered advisors, obtaining an RIA compliance certificate is vital to demonstrate an understanding of ethical guidelines and fiduciary duties in advising clients on investments. Requirements range from passing the Series 65 exam to accredited coursework completion.

Certain niches like insurance, retirement planning, or portfolio management call for additional licenses like Series 6, 7, 63, 65, or 66. Study material and exam fees for these range from $60 – $170 per license. Some states also mandate Investment Banking Representative licenses.

The licensing process provides rigorous training in ethical ground rules and advisor responsibilities around investor interests. Once armed with SEC/state registrations and key specialty permits, RIAs can commence legally serving clients.

8. Get Business Insurance

Starting a new financial advisor business requires insurance to mitigate risks that can derail hard-built success. Being financial stewards of client investments also requires advisors to implement adequate protections for their firms.

Lacking coverage would prove catastrophic for many reasons:

• Should hackers infiltrate client databases and steal personally identifiable information?
• Facing lawsuits, you must pay steep legal fees and settlement costs without insurance.
• If an advisor commits fraud, trades on insider tips, or mishandles client funds, financial and reputational damages ensue with no coverage fallback.
• When natural disasters like floods, storms, or wildfires damage premises and equipment firms face possibly permanent closure.

Ideal insurance coverage includes:

• Errors & omissions (E&O)
• Commercial property
• Workers Compensation
• Umbrella liability plans

E&O shields against negligence claims while cyber protects data assets. Obtain quotes by having an insurer evaluate the firm’s regulatory compliance rigor, security protocols, disaster recovery readiness, and liability exposures. Expect total annual premiums between $5,000 – $20,000 for adequate coverage.

Obtaining business insurance is akin to building organizational resilience. It prepares firms to smoothly handle major liability events, data breaches, and property disasters with financial compensation and legal protections firmly in place.

9. Create an Office Space

Establishing a professional office is pivotal for RIAs to conduct client meetings, securely manage sensitive financial documents, and grow teams as assets under management expand. Some options for an office space for a registered investment advisor include:

Coworking Spaces

Shared offices through providers like WeWork allow solo advisors to start with flexible, low-commitment arrangements. Opting for coworking spaces ranging from $300 – $800 monthly also builds networking opportunities with other entrepreneurs that could lead to referrals. However, being unable to host privacy-dependent client meetings on-site can be a key constraint.

Commercial Office

Dedicated office suites within Class A buildings provide the most professional environment for RIAs to meet and service high-net-worth individuals or institutions. While rents average $3,000+ monthly, the turns key infrastructure, reception staff, conference rooms, onsite parking and credibility with elite clients justify costs as AUMs scale to millions.

10. Source Your Equipment

Outfitting an RIA office with robust technology separates thriving firms from mediocre players. The specialized hardware and software needed fall into four categories, computing devices, cybersecurity programs, portfolio analytics tools, and client relationship management (CRM) systems.

New Equipment

Opting for the latest models with full warranties reassures clients about the firm’s financial stability. Shop business-grade devices with enhanced encryption, firewalls, malware detection, and data recovery features. Expect approximately $3,000 per high-spec laptop/desktop. Check out Best Buy and Office Depot .

Used Equipment

Gently used equipment through auction platforms like eBay cuts acquisition costs by 40% to 60%. Search for off-lease items from reputable manufacturers thoroughly inspected and data-wiped by sellers. Confirm compatibility specs align with software needs before purchase. Try Craigslist and Facebook Marketplace to start.

Rented Equipment

Renting hardware monthly allows advisors to deploy robust systems without major upfront capital. Certain specialty programs are exclusively available via rental from developers. Expect pricing between 5% to 10% of retail costs. While convenient initially, perpetual rents can add up over time.

Leased Equipment

Leasing gives access to cutting-edge equipment via affordable monthly payments over 3 to 5 years backing out the residual value. The lessor assumes the risk and maintenance responsibilities. Ideal for complex IT systems and continually upgrading tech. Adds 20% to 30% premium over outright purchases.

11. Establish Your Brand Assets

Crafting a distinctive brand identity helps investment advisory firms stand out amidst competition while nurturing instant recall value and trust with target clientele.

Getting a Business Phone Number

Acquiring a unique business phone and fax number lends legitimacy over using personal cell contacts for client communications. Cloud-based systems like RingCentral offer toll-free numbers with call routing, voicemail transcriptions, conference calling, and fax/SMS capabilities ideal for advisory operations. Plans start from $20 monthly per user.

Creating a Logo and Brand Assets

A custom logo symbolizing core values, strengths, or specialty areas paired with cohesive visual assets reinforces consistent brand recognition. When designing through affordable services like Looka , advisors can choose from an array of icons, colors, and typography styles matched to their positioning.

Business Cards and Signage

Vistaprint offers cost-effective business cards showcasing advisor credentials, services, and contact information for in-person client meetings and referrals. Plus customized interior/exterior office signage with logos establishes professional visibility. Content is also displayed on their website and mobile apps.

Purchasing a Domain Name

Domains like www.firmnameInvestmentAdvisors.com available through registrars like Namecheap lend authority and amplify SEO efforts. Opt for .com over alternate extensions. Keep names short and easy to remember. Renew for 5-10 years to retain ownership rights. Expect around $15 yearly for domain registration.

Building a Website

Well-designed websites quickly convey advisor value propositions while capturing contact details from prospects. Every RIA needs one. Options include intuitive drag-and-drop site builders like Wix for DIY sites or outsourcing creation to expert freelancers found on marketplaces like Fiverr for complete customization.

12. Join Associations and Groups

Expanding professional networks through industry associations, local meetups, and online forums fuels growth for investment advisors by enabling best practice sharing, referrals, and potentially lucrative partnerships.

Local Associations

Area chapters of leading wealth management bodies like the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA) regularly host workshops, conferences, and networking events attended by top regional RIAs. Expect membership fees of $400 – $850 annually.

Local Meetups

Platforms like Meetup make discovering relevant seminars, mixer events, and skill-building workshops effortless via location/interest-based searches. Attending free meetups keeps advisors abreast of solution innovations.

Facebook Groups

Popular Facebook communities enable advisors to crowdsource guidance from thousands of networks. Learn about niche markets like fee-only planning, exit planning, socially responsible investing, behavioral finance, and other specializations. Check out Funding & Investment Secrets and Value Investments .

13. How to Market an Investment Advisory Business

Implementing multifaceted marketing strategies is non-negotiable for RIAs to consistently attract and convert high-net-worth individuals and institutional clients.

Referral Marketing

While an advisor’s professional and personal networks generate initial clientele, referral programs incentivize existing customers to endorse their services. Offering free credits, gift cards, or donations to their charity of choice for every new client sent establishes goodwill and amplifies word-of-mouth promotion.

Digital Marketing

• Google Ads campaigns targeted by keywords like “retirement planning”, “portfolio management”, and “wealth advisor” help RIAs appear at the top of search results for relevant buyer queries in their geographic area. Expect costs per click between $5 to $15.
• Facebook/Instagram ads showcase niche expertise to hyper-specific demographics filtered by age, income, education levels, and interests. Plan around $100 per month for testing.
• Publishing YouTube explainers establishing thought leadership around market developments, retirement strategies for different generations, and college savings helps content travel virally.
• SEO-optimized blogging discussing industry trends, advisor perspectives, and wealth planning advice improves organic visibility and search rankings when ranking for advisor terms.

Traditional Marketing

• Direct mailers with promotional offers mailed to high-income zip codes still garner respectable conversion rates in certain niches. Budget $2 per mailer.
• Sponsoring community events like golf tournaments and galas frequented by high-net-worth individuals creates networking opportunities. Plan $5,000+ per event.
• Local radio spots build mass reach for name recognition. Expect around $200 for 30 times weekly spot plays.
• Print ads in financial industry trade journals tap directly into large RIA networks open to mergers and acquisition deals.

As trust and credibility anchor business growth in advisory services, marketing should aim to nurture community relationships and convey functional expertise first and foremost.

14. Focus on the Customer

As you learn how to start a investment advisory business, remember your customer comes first. Delivering white-glove service and prioritizing client interests is pivotal for a new financial advisory business.

This involves proactively updating customers on portfolio performance rather than relying on them to inquire. Conducting periodic reviews to realign investment strategies with evolving financial goals also reinforces commitment.

During moments of market volatility assuaging concerns through educational sessions, risk analysis, and adjustment recommendations provides reassurance. Help navigate complex decisions around inheritance planning, stock options, and home purchases.

The exemplary experience at every interaction breeds loyalty even amidst fee changes. Satisfied individuals gladly refer family and friends once the advisor earns goodwill through genuine care for their financial well-being. Over time, the majority of new business stems from word-of-mouth on the back of stellar service.

Ultimately an advisor’s success hinges on the success achieved for customers. The relationships nurtured, knowledge imparted and outcomes secured determine growth. Service with integrity at the core sparks a virtuous cycle benefitting both clients and the firm.

You Might Also Like

March 8, 2024

0  comments

How to Start a Budgeting Coach Business in 14 Steps (In-Depth Guide)

The personal finance coaching industry has exploded in recent years. Between the overall task ...

How to Start a Credit Score Counseling Business in 14 Steps (In-Depth Guide)

The credit score counseling industry has seen steady growth in recent years. According to ...

March 1, 2024

The investment advisory services industry is on the rise. It’s expected to grow at ...

How to Start a Bookkeeping Business in 14 Steps (In-Depth Guide)

The bookkeeping industry is booming, with an expected compound annual growth rate (CAGR) of ...

Check Out Our Latest Articles

How to start a dog clothing business in 14 steps (in-depth guide), how to start a vintage clothing business in 14 steps (in-depth guide), how to start a bamboo clothing business in 14 steps (in-depth guide), how to start a garage cleaning business in 14 steps (in-depth guide).

US wealth management: A growth agenda for the coming decade

Wealth management is a growth industry, but it is experiencing a set of accelerating disruptions. While the pandemic challenged the performance of the US wealth management industry for much of 2020, the last 12 months have given rise to optimism that the conditions for a significant wave of innovation and experimentation across the wealth management ecosystem are in place. The conditions include rapid technological advancements, fast-evolving consumer needs and behaviors (accelerated by the pandemic), and an environment of economic stimulus.

About the authors

This article is a collaborative effort by Pooneh Baghai , Alex D’Amico , Vlad Golyk, Agostina Salvo, and Jill Zucker .

To thrive in this dynamic environment, firms must prioritize growth, adopt an innovation mindset, and be prepared to reallocate resources rapidly in response to the changing context. Finally, to free resources for strategic investment and prepare for any potential market downturn, firms can rethink their cost structures and improve the industry’s spotty record on cost management.

To guide these efforts, this paper offers a brief overview of the US wealth management industry’s present conditions and then presents four themes that define the new growth narrative we foresee. We recommend agenda items for wealth managers to address as they plan how to flourish in the changing ecosystem. Finally, we offer questions for organizational self-assessment.

Coming out of the crisis: Resilient but not unscathed

At face value, the US wealth management industry entered 2021 from a position of strength—record-high client assets, record growth in the number of self-directed and advised clients, and healthy pretax margins (Exhibit 1). However, beneath these strong headline numbers, the story was mixed, with the worst two-year revenue growth since 2010, as well as negative operating leverage. The depressed margins and profit pools that resulted were caused primarily by rock-bottom interest rates and uneven cost discipline (Exhibit 2).

Consequently, while the industry is now benefiting from vigorous market performance, it faces significant crosscurrents: equity-market and interest-rate uncertainty and industry-specific challenges including lack of cost discipline, increased competition from new entrants, and an aging and shrinking advisor force.

Despite this near-term uncertainty, US wealth management remains a growth industry, albeit with moderating revenue growth projections. McKinsey modeling suggests industry revenue pools will grow by about 5 percent per year over the next five years, 1 Long-term asset class forecast, Q2 2021 , State Street Global Advisors, April 22, 2021, ssga.com. driven by moderating market performance, moderate net flows, and the continued shift from brokerage to advisory (where revenue yields are typically higher). However, the growth will not be equally split among industry segments. We expect digital advice models, including robo- and hybrid advisory, to continue growing fastest, potentially even outperforming their historical revenue growth of more than 20 percent per year. Next in terms of growth will be registered investment advisors (roughly 10 percent projected annual growth rate), followed by national/regional broker–dealers (6 percent), direct brokerages (5 percent), wirehouses (2 percent), and other broker–dealers (independent, retail, and insurance owned) plus private banks (1 percent). If interest rates return to prepandemic levels, wirehouses and direct brokerages will disproportionately benefit, given their reliance on interest income from cash for profitability, with the overall growth rate for the industry reaching about 7 percent a year—similar to the growth that occurred between 2015 and 2018.

A growth agenda for the coming decade

Over the last 18 months, the industry has spurred a significant wave of innovation and experimentation. It is also facing long-standing demographic shifts that will redistribute wealth among subsegments. This combination of forces will shape growth trends for years to come. We see four key themes: fast-growth segments, new client needs, new products, and new business models (Exhibit 3).

Fast-growth segments offer new potential

Three investor segments are showing signs of significant and lasting growth: women, engaged first-time investors, and a segment we call hybrid affluent investors.

Women are taking center stage as investors over the next decade. Today, women control a third of total US household investable assets—approximately $12 trillion. Over the next decade, this share will grow. The biggest cause of this shift will be demographics: as baby boomer men die, many will cede control of assets to their female spouses, who tend to be both younger and longer lived. By 2030, American women are expected to control much of the $30 trillion in investable assets that baby boomers will possess—a potential wealth transfer that approaches the annual GDP of the United States. At the same time, younger affluent women are becoming more financially savvy; for example, 30 percent more married women are making financial and investment decisions than five years ago. 2 For more on these trends, see Pooneh Baghai, Olivia Howard, Lakshmi Prakash, and Jill Zucker, “ Women as the next wave of growth in US wealth management ,” July 29, 2020, McKinsey.com.

$3O trillion in investable assets will be possessed by baby boomers by 2030, much of it controlled by women

A new wave of engaged investors are opening accounts. The resurgence of the engaged-investor, or active-trader, segment has been one of the most headline-catching disruptions in the industry. Since the start of 2020, more than 25 million new direct brokerage accounts have been opened, a significant percentage by first-time investors. This growth resulted from a confluence of prepandemic market developments (for example, the elimination of online brokerage commissions, access to fractional share capabilities) and pandemic-related trends such as high savings rates (enabled by lower consumption).

While this segment’s exponential growth is likely not sustainable (for example, there was a sharp decline in trading app downloads and active daily users in the third quarter of 2021), it remains poised for accelerated growth over the next decade, given engaged investors’ relatively low median age of 35. 3 Schwab Generation Investor Study 2021, aboutschwab.com. The opportunity for wealth managers is to serve this segment by meeting their demand for direct brokerage-based investing and to build deeper relationships with them over time—for example, by recognizing that these new investors tend to express their personal values in their investment decisions.

40% increase in total direct brokerage accounts since the start of 2020—more than 25 million new accounts

Hybrid affluent investors are an opportunity to differentiate. While headlines have focused on the rise of first-time young investors with typically low assets, growth in the hybrid investor segment—those with at least one self-directed account and a traditional advisor—has been overlooked. In 2021, a third of affluent investors—households with more than $250,000 and less than $2 million in investable assets—were hybrid (Exhibit 4), a sharp increase of nine percentage points in just three years. The biggest beneficiaries of this trend have been incumbent and new direct brokerages, as well as some traditional wealth managers with sizable direct brokerage platforms.

The rapid growth of hybrid affluent investors is a result of two trends that are expected to persist: investors’ desire for human advice and the ease and affordability of direct investing. Therefore, to foster deep relationships with affluent clients and prevent them from investing with competitors, wealth managers of all types need to have both direct brokerage and advisor-led offerings with a seamlessly integrated experience across the two. Achieving this will not be easy; it will require careful management of channel conflicts and potential revenue cannibalization.

New customer needs provide an opening to differentiate

Investors are increasingly looking for institutions that can provide them with omnichannel access, integration of banking and wealth management services, and personalized offerings. As similar kinds of benefits become available from providers of other services, investors see them more as needs than as luxuries. In fact, fully 50 percent of high-net-worth (HNW) and affluent clients say their primary wealth manager should improve digital capabilities across the board.

Omnichannel access is no longer just ‘nice to have.’ One of the clearest disruptions triggered by the pandemic has been the sharp acceleration of digital adoption across consumer segments—including wealthier and older clients who were previously less digitally inclined with respect to financial advice. As a result, according to McKinsey’s latest Affluent and High-Net-Worth Consumer Insights Survey, digital is now the most preferred channel for clients, closely followed by remote (Exhibit 5).

This trend is even more pronounced for the HNW segment, which we define as households with more than $2 million in investable assets: roughly 40 percent of HNW clients say phone or video conferences are their preferred wealth management channels, and only 15 percent look forward to going back into branches or resuming in-person visits. Interestingly, the preference for digital and remote engagement among HNW clients is higher than for their affluent counterparts.

50% of clients think their primary wealth manager should improve their digital capabilities

Convergence of banking and investing has gone mainstream. Over the last three years, there has been a striking increase in clients’ preference to consolidate their banking and wealth relationships to achieve convenience and better relationship deals: the share with this preference has risen from 13 percent in 2018 to 22 percent in 2021. The trend applies to both wealthy and young households (Exhibit 6). In particular, 53 percent of those aged under 45 and about 30 percent of those with $5 million to $10 million in investable assets prefer to consolidate relationships.

Banks and wealth managers alike can benefit from this trend, but their starting position differs by client segment: HNW, ultra-HNW, 4 In this article we define HNW customers as those with between $2 million and $25 million in investable assets; ultra-HNW have more than $25 million in investablele assets. and older clients tend to consolidate banking with their primary wealth manager, whereas young investors are more likely to consolidate wealth management with their primary bank.

Clients’ reasons for consolidating with their primary bank or investment firm vary. High-yield deposits, lower management fees, and seamless transactions across accounts are the top three reasons for consolidation—and are basically table stakes. Beyond that, our research has found that banks generally win on convenience (for example, an existing relationship with the client, customer service tailored to younger clients), while investment firms win on products and reputation (for example, more expansive accounts or products such as securities-based lending, concierge-like customer service tailored to older clients, and recommendations).

The increased preference for consolidating banking and investing has been driven by a flurry of innovation. National banks are building wealth management capabilities and closely integrating experiences with traditional banking services, often in partnership with fintechs. Full-service wealth managers are upgrading their digital banking capabilities. And consumer-facing fintechs—with millions of users—are blurring the lines between investing and cash management.

Rise of personalized investing. Personalization matters. It is a key driver of client satisfaction and the number-three factor for clients selecting financial advisors. Wealth managers have responded to the demand to personalize investment management with customized, tax-efficient managed accounts. Because of their operational complexity, these products have typically been accessible only to the HNW and ultra-HNW segments. However, direct indexing, fractional share trading, and $0 online commissions are shifting the paradigm by enabling customized portfolios of securities at lower minimums.

Assets under management (AUM) in direct indexing tripled between 2018 to 2020, reaching $215 billion, or 17 percent of the retail separately managed account (SMA) market. We anticipate direct indexing volumes to triple through 2025, given how this new investing technology meets client needs, most notably the growing demand for tax-efficient investing and the desire of some retail investors, particularly younger clients, to ensure that their portfolio holdings reflect their personal values (Exhibit 7). The recent flurry of acquisitions of direct indexing providers by leading US wealth and asset managers will create further supply-side momentum in expanding the growth of the category.

Broader adoption among clients will require further innovation. For both self-directed and advisor-led models, offering direct indexing requires a careful consideration of the trade-offs associated with taxes and environmental, social, and governance (ESG) constraints. All this creates a need for intuitive interfaces and analytical tools, which need to be integrated into the advisor desktop and workflow.

New products expand ways to serve customers

Across industries, transformation arises from the introduction of new products. In wealth management, we see notable potential in two main categories of new products: investments in private markets and investments in digital assets.

Democratization of private markets. In the current lower-for-even-longer interest-rate environment, investors’ appetite for alternative investments is as high as ever, with the young leading the way: about 35 percent of 25-to-44-year-old investors indicate an increased demand for alternatives. Within alternatives, private markets (private equity, private debt, real estate, infrastructure, and natural resources), an asset class that was once the preserve of institutional investors, is making inroads to individual portfolios. Large private-markets firms are building out retail distribution capabilities and vehicles, and home offices make it easier for clients to access private-markets products, often with the help of fintech infrastructure providers. Increased client demand and innovations have potential to increase the share of assets allocated to private markets from about 2 percent in 2020 to 3 to 5 percent by 2025, representing asset growth of between $500 billion and $1.3 trillion. It is imperative for wealth managers to facilitate this growth by making it easier for their clients to access private markets.

Digital assets going mainstream. The arrival of an army of new retail investors has proven to be a boon to the growth of new asset classes that were incubated in the margins of the market. Nowhere is this phenomenon clearer than in the realm of digital assets, which have ballooned from a combined valuation of $100 billion in 2019 to a market capitalization of more than $2.5 trillion today. They span multiple digital asset classes, or “tokens,” beyond cryptocurrencies, including tokenized equities, bonds debt, stablecoins (typically pegged to conventional currencies), art, and collectibles. The motivations for investors in digital assets are diverse—experimentation, speculation, the search for inflation protection, or getting exposure to the building blocks of new technology that is increasingly cast as the next iteration of the internet (that is, Web3). Whatever the motivation, investors’ enthusiastic embrace of digital assets is very clear. For example, digital trading platform Coinbase has gathered a staggering 68 million verified users.

For wealth managers, digital assets present both an opportunity and a challenge. On the one hand, the cryptocurrency market has grown too large to ignore amid robust client demand; 11 percent of affluent clients and 8 percent of HNW clients invest in digital assets. On the other hand, three broad challenges are associated with offering cryptocurrencies. First, regulatory ambiguity—on asset classification and tax reporting, among other issues—has lingered, often creating uncomfortable levels of risk exposure for wealth managers. While it is still early days, the advent of crypto exchange-traded funds (ETFs) could help address some of these challenges. Second, the infrastructure required for offering digital assets, including custody services, differs from what is required for traditional investment products. Lastly, digital asset classes are not well understood by many advisors, so advising on the products is challenging for them.

Wealth managers face a choice: they can take a wait-and-see approach and accept the business risks associated with staying out of a rapidly growing market, or they can pursue the opportunity aggressively by leveraging partnerships with fintechs while addressing heightened regulatory risks. What remains for certain is that over the longer term, there is meaningful potential for a far broader class of digital assets to enter the investing mainstream and for the underlying technologies of blockchain-based decentralized finance (DeFi) to revolutionize the distribution of investment products, including the T+0 settlement cycle.

New business models position firms for growth

The last of our four contours of the new growth narrative is the introduction of new business models. Two such models are of importance: offering services to registered investment advisors (RIAs) and digitizing the delivery of advice.

Advisors’ desire for independence presents an opportunity to serve RIAs. The last decade has seen a migration of advisors to registered independent advisors, with 24 percent of all financial advisors being part of an RIA in 2020, compared with 16 percent in 2010. This shift is expected to continue apace, with the share of advisors affiliated with RIAs growing to 26 percent by 2025. Motivations for advisors’ migration to RIAs include the expectation of higher payouts plus two other factors: First, advisors are looking at the RIA channel as the best way to monetize their business, with RIA acquisition multiples for top advisors (those with books over $1 billion) two to three times higher than retire-in-place incentives at traditional wealth managers. Second, technology and services firms, working in conjunction with the major custodians, have lowered barriers for advisors to launch their own firms. Moreover, advisors believe they can procure technology and services that are similar to or better than what traditional wealth managers provide.

While this trend presents a challenge for wirehouses and broker–dealers, whose advisor force is expected to shrink by 3 percent over the next five years, there is a silver lining: RIAs’ reliance on third-party products and solutions creates an opportunity for participants in the wealth management ecosystem to seek a share of this fast-growing revenue and profit pool. Some ecosystem participants are viewing this segment in terms of a single product or service—lead generation, tech point solutions, custodial offerings, banking-as-a-service for advisors, asset management. Others, including turn key asset management providers (TAMPs), established custodians, and traditional wealth managers with attacker mindsets, are attempting to build a next-generation, wirehouse-quality platform for advisors.

Therefore, wealth managers, especially those who rely on advisor recruiting for growth, need to look beyond the competitive threat posed by the fast-growing RIA channel and explore new business models that would allow them to participate in this growing revenue and profit pool. Wealth managers seeking to serve the RIA segment will need to manage technology as a core competency, and those with large advisor forces will need to manage the advisor attrition risks associated with opening up the platform (even partially) to RIAs.

2X faster annual revenue growth projected over the next five years for RIA channel versus industry overall

The opportunity for digital advice models. Digital advice models, including robo-advisor and hybrid advisor models, have been around for more than a decade and have been the fastest-growing wealth management delivery model, with more than 20 percent annual revenue growth between 2015 and 2020. They still account for only about 1 percent of the market, but the growth prospects are high: the last three years—and last 18 months in particular—have marked a step increase in investor comfort levels with these offerings (Exhibit 8). In fact, the share of investors saying they are comfortable with remote advice grew from about 38 percent in 2018 to roughly 46 percent in 2021. Among clients younger than 45, the comfortable share grew from 43 percent to 59 percent. Similarly, while comfort with digital-only advice remains modest overall at about 15 percent, it has more than doubled since 2018 among investors under 45, to roughly half in 2021.

Unsurprisingly, the growing interest has motivated wealth managers to expand into and innovate in this channel. However, wealth managers should be aware that achieving a step change in adoption of digital advice offerings will require going beyond the lower-cost value proposition, privileged acquisition strategies, and brand equity. Among investors who do not express comfort with robo-advisor models, the main reasons they give are perceived lack of personalization, privacy concerns, and lack of motivation to explore the offering. Bringing more investors on board will require matching the advisor-like experience with personalized content and solutions.

60% increase in share of investors comfortable with digital-only models since 2018 and 21% increase in those comfortable with remote models

Embracing the new growth narrative: A four-part agenda

Clearly, wealth management remains an attractive industry with strong growth fundamentals and long-term margins. If anything, the disruptions we have discussed in this report expand the industry’s options and will shape the growth narrative for the next decade.

Given the pace of change, stasis is not a viable option. We recommend that wealth managers follow a four-part agenda for action: reposition, redesign, reimagine, and reallocate.

Reposition the firm for what’s next

Every wealth manager needs to take a hard look at the secular growth themes shaping the industry—fast-growth segments, banking, personalization, new product propositions, and new business models—and decide, based on the firm’s unique sources of competitive advantage, which of these updrafts it should ride. Where a firm lacks natural advantages in capitalizing on particular growth themes, M&A is a critical lever for accelerating the repositioning of individual wealth management franchises. The last 24 months have seen numerous high-profile transactions as firms seek scale and/or the acquisition of new capabilities to accelerate their strategy. We expect M&A to be a particularly important theme over the next 24 months as wealth managers reposition themselves for the postpandemic “next normal,” whenever it arrives.

Redesign offerings for new needs

Firms also should monitor and try to anticipate evolving client needs, using this information to redesign their offerings. Examples could include new value propositions (for instance, around tax efficiency, integration of wealth and banking, or specific high-growth segments), privileged access to new products (such as digital assets or private markets), or completely new business models (for example, light-guidance digital offerings).

Reimagine client engagement and experience

The third agenda item is to radically reimagine client engagement and experience. The pandemic has reset clients’ assumptions about how they want to be served, and the accelerated uptake of technology has created unprecedented degrees of freedom for wealth managers. Every wealth manager needs to ask, “What is the blueprint for a client experience model in a digital-first world?” and “How can such a model simultaneously deepen our relationships and broaden our reach?”

Reallocate resources to support the strategy

Finally, successful wealth management firms make a bold commitment to putting the money where the strategy is, and they make multiyear resource-reallocation decisions, including where firm’s top talent spends time, in favor of growth. Regular reallocation of resources is a critical but often neglected step that can close the loop between visionary strategic intent and successful implementation.

Our research across industries suggests that fortune favors the bold: the top third of companies, which have been the most dynamic resource reallocators, achieved 1.6 times higher total returns to shareholders than the bottom third (about 10 percent versus 6 percent annualized over 20 years). In the wealth management context, we estimate that top performers are making strategic resource reallocation decisions to the tune of 15 percent or more of operating expenses over five years, whereas those simply dabbling with subscale experiments in strategic growth areas will not see results. Simply put, firms should not aim to be all things to all clients.

Five questions for wealth management executives

Given the significance of the opportunity at hand, wealth management executives must consider their firm’s readiness to capitalize on it. To provoke a self-assessment, we offer five questions for executives to ponder and discuss with their teams:

• What are the three or four priority growth themes you are betting on for the next five years? While several growth avenues and disruptions are reshaping the wealth management landscape, the optimal recipe will differ depending on an individual firm’s starting position and its sources of competitive advantage. Clarifying priority growth themes and aligning with your executive team help lay a foundation for developing a winning growth strategy.
• Do you have the right team and operating model? To paraphrase Peter Drucker’s famous phrase, “Execution eats strategy for breakfast.” A prerequisite for successful execution is an effective leadership team that is brought together around critical behaviors. In the context of wealth management and the shifts the industry is going through, these behaviors for executive teams must include operating in an agile manner and developing connections across business units and functions. In addition, the team needs leaders who are not afraid to experiment and innovate and whose mandates are aligned with major growth themes that typically cut across business unit lines (for example, banking and wealth, segments, sustainability). 5 For more, see Natasha Bergeron, Aaron De Smet, and Liesje Meijknecht, “ Improve your leadership team’s effectiveness through key behaviors ,” January 2020, McKinsey.com.
• Does your ability to attract sought-after client-facing and technology talent match your ambition? Over the last 12 to 18 months, wealth managers of different sizes and business models have publicly announced ambitious hiring targets with an emphasis on client-facing and technology talent. However, these plans have been challenged by severe labor shortages across industries, as a result of what has been dubbed the Great Attrition: 40 percent of employees say they are at least somewhat likely to leave their current job in the next three to six months, and 54 percent of employees say they leave because they do not feel valued by their organizations. 6 Aaron De Smet, Bonnie Dowling, Marino Mugayar-Baldocchi, and Bill Schaninger, “ ‘Great Attrition’ or ‘Great Attraction’? The choice is yours ,” McKinsey Quarterly , September 8, 2021, McKinsey.com. Wealth management is no exception to this trend. While many of the levers for attracting and retaining talent remain effective, other factors have gained importance during COVID-19, with more than 80 percent of workers saying that a hybrid-office working model is the optimal route forward. In addition to rethinking their operating models to attract and retain talent, wealth managers need to take bolder and more creative approaches to attracting new-to-industry talent. These may include flexible working arrangements, alternative career paths (including new payout structures for client-facing roles and programs aimed at creating the next generation of advisor talent), and partnerships with various types of educational institutions.
• Are you reallocating a significant portion of your resources—spending and capital—toward priority growth areas, including M&A? Systematic and dynamic resource allocation is an essential part of a winning business strategy. Achieving industry-leading levels in this area involves several steps: conducting a critical review of the firm’s existing cost structure, introducing a culture that continuously reallocates resources from low- to high-value tasks, increasing transparency around returns of individual projects, and implementing governance processes to enable more dynamic resource allocation. Capital reallocation can be a powerful tool for acceleration of growth in high-priority areas, which requires a clear M&A blueprint consistent with the broader enterprise strategy. We expect three major M&A themes to shape wealth management deal making in the next 18 to 24 months: (a) transactions focused on platform synergies, mostly in the vibrant RIA market but also among the largest wealth managers; (b) transactions focused on entering adjacent revenue pools, such as asset management, banking, retirement, or payments; and (c) transactions to acquire capabilities that will be key for growth—for example, direct indexing, tax solutions, or wealth tech. While not all deals are accretive in value, the top 25 percent of deals achieve 8.5 percent excess TRS. Top acquirers are distinguished from the rest by two characteristics: the ability to embed M&A in their strategic planning process and a clear post-acquisition playbook, inclusive of an integration capability. Thinking through programmatic M&A in the context of business strategy is essential for making accretive deals that contribute to both top-line growth and business value.
• Do you have a partnership strategy rooted in your business strategy? When it comes to digital, data, and technology, it is impossible for any organization to stay ahead of the pack on every dimension, so a clear partnership strategy is crucial. In fact, many wealth management incumbents already rely on fintechs to gain access to better technology across the value chain—client acquisition, client front-end, portfolio management, point solutions on advisor desktops, cybersecurity, and cloud infrastructure, among others. Looking ahead, it is important for executives and their teams to be clear-eyed about which capabilities will be a source of sustainable competitive advantage and then to decide how to acquire those capabilities: build in-house, build in-house in partnerships with fintechs, or outsource.

Despite a modest dip in profits, the US wealth management industry has thus far come through the pandemic not only unscathed but with tailwinds from sustained demand for advice, potential upside of higher interest rates, the rise of new client segments, and the embrace of unprecedented levels and speed of innovation. As the industry moves toward the hoped-for postpandemic new normal, it faces near-term macroeconomic uncertainty but also meaningful opportunity.

Tomorrow’s successful managers will need to adapt their models to preempt the disruptions that lie ahead and adopt a new sense of purpose and innovation as they head into a period of growth.

Pooneh Baghai is a senior partner in McKinsey’s Toronto office; Alex D’Amico and Jill Zucker are senior partners in the New York office, where Agostina Salvo is an associate partner; and Vlad Golyk is a partner in the Southern California office.

Explore a career with us

Related articles.

Crossing the horizon: North American asset management in the 2020s

North American wealth management: Money in motion, but not always to the bottom line

The value of personal advice: Wealth management through the pandemic

Why USA Financial?

Find out if you’re a right-fit advisor.

Coaching & Consulting

Unlock quality referrals, scale your business, free up time.

Incorporated Compliance

The support you need to grow and protect what you’ve built.

Transition Assistance

Hands-on partners to make the process go smoothly.

Marketing Support

Tools and resources for attracting your ideal clients.

Attentive Operations

Simplified paperwork to reduce needless back and forth.

Investments & Asset Management

Diversified investment solutions in an all-in-one portfolio management platform.

Financial Planning

Frictionless planning tools to optimize client experience. 

Insurance & Annuities

Manage risk efficiently to complement your portfolios.

Integrated Technology

Get more options with solutions that work.

Stay informed with the latest from industry experts, including these featured series:

• All Insights
• Trending Report Series
• Marketing Insights
• The RARE Advisor Series

Advisor Events

Learn from speakers and industry experts, including these featured events:

• Prospective Advisors
• Affiliated Advisors

Our History

Our success story is your success story.

Corporate Structure

Support your practice with our family of specialized companies.

• USA Financial Exchange
• USA Financial Formulas
• USA Financial Securities
• USA Financial Insurance Services
• USA Financial Advisor Advancement

Opportunities to join our team.

Leadership & Team

Meet our team committed to helping you grow.

Media/Press

Stay up to date on what’s new and noteworthy.

• How We Work
• Investor Insights
• Forms & Disclosures
• Investor Logins
• Advisor Login

Guide to Building and Growing Your Advisory Business

The decade’s-long trend toward fee-based advisory business was validated as financial professionals faced the global pandemic in 2020. While professionals relying on new clients for revenue via transactional business found themselves in a predicament as the country went on lockdown and people stayed home, those with recurring revenue streams from assets under management (AUM) were able to navigate the choppy waters with far less revenue fluctuation in their businesses.

While the trend toward AUM has been growing for the past decade, there appears to be a perfect storm triggering demand. The current market conditions have investors clamoring for active participation in the stock market. Meanwhile, regulatory changes seemingly favor the business model where conflicts of interest can be reduced or eliminated.

This puts financial professionals in a position to introduce investment advisory services or grow their current AUM. This guide will share 30-years of insights, tools, and best practices for growing and managing AUM whether you’re just getting started or have been doing it for many years.

• Setting yourself up for success.
• Understanding TAMPs.
• Legal stuff.
• A different kind of growth.
• Your questions answered.

Want to keep reading?

Related posts.

What’s Trending: Rates Too High, Yet Somehow Too Low

The Federal Reserve is in quite a conundrum - rates are both too high and too low. What people don’t realize is that there is a little-known calculation that actually helps identify this. We’ll reveal this calculation in this episode of the Trending Report, as well as cover market data as of 3/22/2024.

What is a TAMP and Why Do Advisors Use Them?

The financial services industry is a whirlwind of change: New rules, products, and evolving technologies that can quickly overwhelm even the most seasoned advisor. Add to that the juggling act of managing daily demands and operational tasks while building your ideal practice. No wonder so many advisors feel like they’re just winging it year after year.

What’s Trending: Active vs. Passive Portfolio Errors

As humans, we tend to make very predictable errors. We’ve been on a strong bull run for quite some time now, and we’re seeing investors making the same mistakes they have in the past. In this episode of the Trending Report, we’ll take a deeper look at these active vs. passive portfolio errors, as well as cover market data ending on 3/8/2024.

• Create Account

Signed in as:

[email protected]

• Business Models
• Team Building
• Transitioning/Retirement
• Articles & Interviews
• Template Tutorials

BUSINESS MODELS FOR FINANCIAL ADVISORS

HANDBOOK AND TEMPLATES

Introduction

Listen to the introduction to Business Models for Financial Advisors read by Christine Timms. 

Read the introduction to Business Models for Financial Advisors .

Table Of Contents

Peek at the table of contents to see all of the topics the book covers. 

SUMMARY OF HANDBOOK

A well articulated, written business model is a valuable tool for advisors at all stages of their career. Advisors having a deeper understanding of their own practice and who it serves best, will lead to sustainable relationships based on a win-win business model. I define an advisor’s business model as the articulation of who the advisor’s most compatible clients are, the services and products that the advisor offers those clients, how those products/services are provided, how clients are charged and how the advisor is paid. I show how advisors in all stages of their careers can benefit from a well-defined business model, even those about to retire. The handbook provides a checklist process to quickly articulate, develop or analyze an existing or desired unique business model. I provide an example of the process by showing completed checklists based on the final years of my practice and the resulting printed business model. I include discussions regarding many of the required decisions as we progress through the checklists for the various business model components. I also discuss household capacity of practices and provide an analytical tool and checklists to facilitate the segmentation of clientele. This handbook includes appendices “Why Advisors are Not Interchangeable”, “Why Many Revenue Sharing Advisors Have and Deserve Above Average Incomes” and “The Average Advisor of Various Financial Advice Channels.”   

TESTIMONIALS

“The ideas and templates Chris developed in Business Models for Financial Advisors are useful and practical. Advisors like myself can benefit immensely by using these tools to help structure our practice and therefore provide a more consistent and positive client experience.” 

—Maili Wong, CFA, CFP®, FEA 

Executive Vice-President, Senior Investment Advisor & Senior Portfolio Manager, 

Director, Wellington-Altus Holdings Inc. 

Author of Smart Risk: Invest Like The Wealthy To Achieve A Work-Optional Life

2022 Canadian Advisor Of The Year (Wealth Professional)

One of Report On Business 2021 SHOOK Canada's Top Wealth Advisors

One of Canada’s Most Powerful Women: Top 100TM by WXN  

“I really like your approach and, in particular, all the useful templates and checklists you provide. It is far more practical than many practice management books I have read over the 32 years I have been in the industry.”

—Gary Mayzes 

Senior Vice-President & Regional Manager, Wellington-Altus Private Wealth 

Over 30 years experience in the investment advice industry

“Business Models for Financial Advisors has been a valuable source of ideas and tools for my practice. The service model (communications, investing, tax, resource management, pricing/client cost) checklists provided us with documented questions on areas we may have thought of previously but have never written down as a defined process. It created awareness that we may not be going as deep into personalizing meetings for each client. My associate specifically found the financial planning service model helpful. Along with our current model, he appreciates the detail put into the checklists. I think they would be a major asset for advisors that lack process and a huge asset for advisors early in a career.” 

—Kevin Punshon

Financial Advisor for over 30 years

Chairman’s Club member

Branch Manager Big Five Canadian Bank owned brokerage firm  

“The ideas and checklists presented in Business Models for Financial Advisors are very timely and helpful for us to use as a business planning tool as we develop and settle our business plan forward and develop the appropriate business model(s) to help us accomplish our objective.… It is, in aggregate, a superb tool for us to use to help all of the people in my practice determine, define and settle the forward direction we need to take our business to the next higher level.”

—Rollie Guenette

Financial Advisor for over 25 years

Big Five Canadian Bank owned brokerage firm  

“Your business models book was excellent. I’ve shared it with my team to read so that we can implement some of your best practices. It’s always valuable to take a deeper dive into your business and be continually improving on the efficiency and what you have to offer. Your book pushed us to do that.”

—Adam Slumskie

Portfolio Manager

Financial Advisor for 13 years

Named one of 2021 Top Wealth Advisors in Canada by Shook Research and the Globe & Mail 

available templates

Business model checklists, service model client segmentation checklists.

Eight checklist templates to help you articulate, develop or analyze your business model:

• Compatible Sustainable Clientele Checklist (sample and template)
• Service Model: Communication Checklist (sample and template)
• Service Model: Investing Checklist (sample and template)
• Service Model: Financial Planning Checklist (sample and template)
• Service Model: Tax Services Checklist (sample and template)
• Resource Management Checklist (sample and template)
• Pricing and Client Costs Checklist (sample and checklist)
• Choosing Compensation Structure (sample and checklist)
• Four checklist templates to help you articulate your customized service offerings for A/B/C/D segments of your clientele.
• Segmenting Clientele: Identify Your Segmentation Criteria
• Segmenting Clientele: Checklists for each of the components of the service model (samples and templates)   

Free Flow Chart

Investment allocation decision flow chart.

A template to prepare a concise and simplified summary of your approach to investing and a practical worksheet for meetings and conversations with clients regarding the allocations in their investment portfolio.  

Note that some templates may not be exactly as pictured above or in the handbooks.

Copyright © 2023 CT Financial - All Rights Reserved.

Page Unavailable

Unfortunately, the page you requested is temporarily unavailable.

Please try again later or call 1-800-522-7297 between the hours of 8:30AM – 7:00PM EST

Akamai Reference Number: 18.24fc733e.1714239772.157079e2

• Search Search Please fill out this field.
• What Is an RIA?
• Understanding RIAs

Registering as an RIA

• Responsibilities
• Requirements

RIAs vs. Broker-Dealers

How rias make money, how to choose an ria, what else to check, the bottom line.

• Finding a Financial Advisor

Registered Investment Advisor (RIA) Definition

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Investopedia / Julie Bang

What Is a Registered Investment Advisor (RIA)?

A registered investment advisor (RIA) is a financial firm that advises clients on securities investments and may manage their investment portfolios . RIAs are registered with either the U.S. Securities and Exchange Commission (SEC) or state securities administrators.

RIAs and the people who work from them have fiduciary obligations to their clients, meaning that they have a fundamental duty to always and only provide investment advice that is in their client’s best interests.

Key Takeaways

• Registered investment advisors (RIAs) are financial firms which manage the assets of individual and institutional investors.
• RIAs must register with the U.S. Securities and Exchange Commission (SEC) or a state regulatory agency, depending on the value of assets under the RIA’s management.
• RIAs typically earn their income through management fees, calculated as a percentage of a client’s assets under management (AUM) by the RIA.
• Unlike broker-dealers, RIAs have a fiduciary duty to put the best interests of the client first.
• Investment advisor representatives (IARs) are the financial professionals who work for RIAs.

Understanding Registered Investment Advisors (RIAs)

The rules on investment advisors were formulated by the Investment Advisers Act of 1940 . This law requires individuals or businesses that dispense professional investment advice to register with the SEC, although there are exemptions for smaller firms. Advisors might also be considered qualified professional asset managers (QPAMs) .

Investment advisors are permitted, although not required, to register with the SEC if they manage a minimum of $25 million in assets . However, it becomes mandatory for those firms that manage $100 million or more, as RIAs managing at least that amount are required quarterly to disclose their holdings to the SEC. Investment advisors who manage smaller sums of investment money are typically required to register with state securities authorities.

RIA vs. IAR

Note that there is a difference between a registered investment advisor (RIA) and an investment advisor representative (IAR) . An RIA is a company that offers financial guidance to clients. The IAR is the person who gives the financial advice. The RIA can have many employees, including several IARs, or it can be just one person who is both the RIA and the IAR. The IAR thus works for the RIA and provides the actual financial services to the clients.

Registering as an RIA does not imply any recommendation or endorsement by the SEC or any other regulator. It means only that the investment advisor has fulfilled all of that agency’s requirements for registration. Registering with the SEC requires disclosing information that includes:

• Investment style of the advisor
• Assets under management (AUM)
• Their fee structure
• Any disciplinary actions that were taken against the advisor
• Any current or potential conflicts of interest
• Key officers, if the RIA is a company

RIAs must annually update their information on file with the SEC, and the information must be made available to the public.

Services of an RIA

RIAs provide more services than just investment advice. Their services and advice may cover the following subjects:

• Financial planning
• Retirement planning
• Estate planning
• Wealth management
• Investment management
• Debt repayment

Requirements of RIAs

RIAs must follow certain practices and procedures when furnishing advice to their clients. These include:

• SEC registration : RIAs with more than a certain level of AUM are required to register with the SEC, as well as a state governing body depending on the location and the number of clients .
• Disclosure : RIAs are required to disclose any risks or possible conflicts of interest pertaining to the specific transactions that they recommend to their clients. RIAs must also ensure that the client understands any risks.
• Assumption of burden of proof : RIAs, if confronted by a client about the suitability of an investment, bear the burden of proof—meaning that the RIA must prove that the risk was disclosed and that the investment could be considered suitable.
• Fiduciary duty : RIAs are required to act as fiduciaries , meaning that they must act in the best interests of clients and avoid any conflict of interest concerning products and services offered to them.
• FINRA compliance : RIAs are required to meet certain compliance requirements with the Financial Industry Regulatory Authority (FINRA) . Besides providing online applications for registering RIAs, the FINRA requires Form ADV to be filed.
• Documentation : RIAs are required to keep extensive documentation in compliance with SEC record-keeping regulations.

RIAs differ from broker-dealers in important ways. RIAs provide advice on all matters related to finance, including investments, taxation, and estate planning. Broker-dealers tend to focus more narrowly on facilitating purchases and sales of assets like stocks.

Most importantly, in interactions with clients, RIAs are expected to act in a fiduciary capacity, while broker-dealers are only required to satisfy the standard of suitability . Clients of RIAs can be assured that their advisors always and unconditionally put their best interests first. Clients of broker-dealers need to be aware that the broker-dealer is permitted to dispense advice that is merely “suitable” for their client’s investment portfolios.

Unlike RIAs, broker-dealers are not required to disclose potential conflicts of interest or make their clients aware of less expensive or more tax-efficient investment alternatives.

The following are some common fee structures for investment advisory firms:

• Management fees : An RIA can collect a management fee annually as a percentage of the RIA’s AUM. Management fees can align incentives, as an RIA who can raise the value of a client’s portfolio can collect a higher management fee .
• Performance-based fees : An RIA can assess a fee based strictly on the performance of a portfolio. Not all clients are eligible for this type of fee structure, though—in general, only those with at least $1.1 million in assets managed by the RIA or $2.2 million in net worth can qualify.
• Asset-class-based fees : Some RIAs who charge management fees vary the percentage rates based on asset class . An RIA might charge a management fee of 1.5% for equities like stocks and a 0.75% management fee for fixed-income investments such as bonds.
• Hourly or flat fees : RIAs are increasingly providing fee-based services that are not contingent upon how much money the client has to invest. Investors can work with RIAs who charge fees on an hourly basis or at a flat rate, with some RIAs offering subscription-based services.

Many RIAs collect fees based on how much investment money they manage. But other fee structures are emerging that may be better suited for smaller investors.

Always do some careful research before selecting an investment advisor. You need a firm that is aligned with your interests and needs. An excellent source and starting point is the SEC’s Investment Adviser Public Disclosure website , which allows you to search for every RIA in the country.

Note that when you are choosing an RIA, you are choosing the financial firm that you will be working with, and not necessarily an individual advisor. Investment advisor representatives (or IARs) are the individuals who work for the RIA and directly provide advice to clients. It's quite possible that an RIA have just a single advisor, or else have several IARs, each with their own unique areas of expertise and approach to investing.

Therefore, when you're selecting an RIA, you're not just choosing a firm but also potentially choosing among the individual IARs within that firm. Make sure to understand both the philosophy and standards of the RIA and the specific skills and qualifications of the IAR who may be handling your portfolio.

Once you select those firms that fit your location requirements, you can review each firm’s website and social media. Also:

• Check the type of services that they provide . The type and level of advice that RIAs provide can vary widely from firm to firm, so make sure the areas on which they focus fit your needs.
• Check their Form ADV . RIA firms are required to file Form ADV , which is the uniform form used by investment advisors to register with both the SEC and state securities authorities. The form, which should be offered to you by the firm in which you are interested, provides detailed information about the firm, from fees and client types to assets under management and more.
• Check out their IARs. In addition to the RIA firm, check out the investment advisor representatives (IAR) employed at the firm using FINRA's free BrokerCheck tool. This tool allows you to see the IAR’s registration status, employment history, disciplinary actions, and customer complaints. You can also compare different IARs and find out their qualifications, certifications, and areas of expertise. By using this tool, you can make an informed decision about who will manage your investments and how they will do it.
• Check the assets under management (AUM) . Search the total AUM of the firm in which you are interested by using the SEC’s Investment Adviser Public Disclosure website, and compare them with yours to see if your assets are on the low or high side for the firm.

RIA or IAR: What is the Difference?

• An RIA is a firm that is registered with the Securities and Exchange Commission (SEC) or a state's securities agency. The firm gives advice about securities and engages in other related activities. As a fiduciary, an RIA has a fundamental obligation to provide investment advice that always acts in their clients' best interests.
• An IAR, on the other hand, is an individual who works for an RIA. They are the actual persons who interact with clients and provide the advice. An IAR must pass certain qualifications to be associated with an RIA and must adhere to the same fiduciary standards.

In other words, the RIA is the entity (or firm), while the IARs are the individuals working under that entity. The RIA firm as a whole has a fiduciary duty to their clients, and each individual IAR also has that duty. When a client hires an RIA, they will typically interact with an IAR who will be their personal advisor.

How do you register as an RIA?

A firm can register as an RIA by filing Form ADV with the SEC. Within 45 days of the filing, the SEC must either grant registration or begin proceedings to deny it. In addition, RIAs are also required to abide by the “brochure rule,” which requires them to inform clients with information about their practice, educational, and business backgrounds. RIAs must also maintain accurate books and records, subject to examination by the SEC.

Which regulatory agency do RIAs register with?

RIAs may register with the SEC if they manage at least $25 million in assets, and are required to do so if they manage more than $100 million. Investment advisors managing smaller amounts of money are typically required to register with state-level agencies.

What fees do RIAs charge?

RIAs can charge fees in several ways. The most common type of fee is the annual management fee, which is based on the value of a client’s assets under management (AUM) with the RIA. RIAs can also charge fees based on performance, asset class, or hours worked.

You don’t need an RIA to invest money. Nonetheless, demand for RIAs is growing, with the assets managed by U.S. RIAs increasing annually by 12% from 2016 through 2021. The consulting firm McKinsey & Co. finds that younger clients are preferring to consolidate where they receive their financial services.

If you decide to work with an RIA, that advisor doesn’t even need to be human. You have a choice of robo-advisors —automated software tools that dispense investment advice based on information about yourself and investment preferences that you provide. The availability of this technology has further lowered the price of working with an RIA.

U.S. Securities and Exchange Commission. “ General Information on the Regulation of Investment Advisers .”

U.S. Securities and Exchange Commission. “ Form ADV .”

U.S. Securities and Exchange Commission. “ Order Approving Adjustment for Inflation of the Dollar Amount Tests in Rule 205-3 Under the Investment Advisers Act of 1940 .”

U.S. Securities and Exchange Commission. “ How to Register as an Investment Advisor .”

McKinsey & Co. “ Registered Investment Advisors: How US Banks Can Weigh the M&A Potential .”

• Financial Advisor: How to Choose the Right One for You 1 of 28
• What Does a Financial Advisor Do? 2 of 28
• Qualifications That Every Financial Advisor Needs 3 of 28
• What Does Your Advisor's Designation Mean? 4 of 28
• Do I Need a Financial Advisor? 5 of 28
• The Real Cost of a Financial Advisor 6 of 28
• Financial Planner vs. Financial Advisor: What’s the Difference? 7 of 28
• What You Need to Know About Fee-Only Financial Advisors 8 of 28
• Fee- vs. Commission-Based Advisor: What's The Difference? 9 of 28
• Registered Investment Advisor (RIA) Definition 10 of 28
• Investment Advisory Representative (IAR): Definition and Duties 11 of 28
• Personal Financial Advisor: What It Is, What They Do 12 of 28
• How Do I Find a Financial Advisor? 13 of 28
• How to Find an LGBTQ+-Friendly Financial Planner 14 of 28
• How to Find a BIPOC Financial Advisor or Planner 15 of 28
• How to Find a Woman Financial Advisor or Planner 16 of 28
• How to Find a Financial Advisor or Planner at Any Age 17 of 28
• How To Find a Socially Responsible Financial Advisor or Planner 18 of 28
• Investopedia 100 Top Financial Advisors of 2023 19 of 28
• The Leading Women Financial Advisors of 2023 20 of 28
• Standout Financial Literacy Efforts by Independent Advisors 21 of 28
• What 5 Top Financial Advisors Wish They Knew as Young Investors 22 of 28
• 10 Key Questions To Ask Your Financial Advisor 23 of 28
• Ethical Standards You Should Expect From a Financial Advisor 24 of 28
• Does Your Financial Advisor Speak Crypto? 25 of 28
• What Fees Do Financial Advisors Charge? 26 of 28
• Resolving Disputes With Your Financial Advisor 27 of 28
• The Smart Way to Switch Financial Advisors 28 of 28

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• CONTACT US >
• ADVISER PORTAL >

• Investment Approach
• All Portfolios
• Long-Term Wealth Protector
• Long-Term Wealth Builder
• Invest via HUB24
• Invest via Mason Stevens

The future proof business model for financial advisers

A thriving financial advice business looks very different today than it did only a few years ago. Increasingly stringent regulations and higher client expectations have left traditional advice firms struggling to make headway - with thousands exiting the industry. Interestingly, advisers prepared to adopt a modern financial planner business model are quickly filling the void and boosting their profitability at the same time.

• Has a value proposition that is firmly focused on clients' individual goals and circumstances
• Provides strategic financial advice rather than investment management value proposition
• Outsources non-value-adding parts of the business to maximise client-facing time and lower costs
• Utilises a managed account solution to take advantage of specialist portfolio management
• Manages risk effectively to mitigate market volatility and the changing dynamics of traditional asset classes
• Meets compliance obligations by design

The recommendations stemming from the Hayne Royal Commission in 2018 instigated substantial structural changes within the financial advice industry. A critical adjustment is a transition from the sale of financial products to a focus on providing advice with the client's best interest placed squarely in the centre of the business. Mounting compliance requirements are also leading to skyrocketing costs and complexity, eating into time and business profit. At the same time, better public access to financial information and investment options have raised client expectations.

To demonstrate value to such clients, advisers must truly understand their client's individual financial needs and offer transparent and reliable investment solutions capable of delivering favourable outcomes to meet their goals. This is especially challenging amid today's uncertain investment environment of low yields and lofty stock and property market valuations. Clients seek reassurance that their financial objectives will be met, irrespective of how the market performs.

This ongoing industry disruption presents an opportunity for innovative advisers to future-proof their business, ensuring that they not only meet the higher industry standards but can build scale while keeping a lid on compliance costs. At the same time, advisers can present their clients with a credible business value proposition that clearly explains how they will help them attain their financial goals.

Such an organisational transformation is made possible by plugging into a whole-of-business goals based investment managed account solution, such as Dynamic Asset. Managed accounts generate a range of benefits for advice firms - from boosting efficiency to making it possible to provide high-quality personal advice to each client, not just those of high net worth.

Under a professionally managed account solution, financial adviser firms outsource the non-core functions of their business, such as time-consuming investment research and portfolio management functions, while improving compliance through better-aligned portfolios. Most importantly, advisers retain the aspects of their business that add the most value; mainly, meaningful client engagement that maximises value and results in satisfied and loyal clients who generate further referrals. These benefits have led more than 70% of advisers to report that managed accounts have lifted their practice's profitability, according to the May 2021 SPDR ETFs / Investment Trends Managed Accounts Report.

Dynamic Asset's whole-of-business managed account solution allows advisers to construct unique client portfolios across super and non-super investments. Advisers mix and match their clients' investments between five professionally managed portfolios, each aiming to deliver a specific risk-adjusted return that is not reliant on market conditions.

Risk-adjusted returns can be achieved by adopting active investment management and engaging alternative assets and strategies to decouple returns from traditional asset classes, such as bonds and stocks. Active management begins with asset allocation based on forward-looking performance expectations rather than historical asset class benchmarks, as commonly used with SAA portfolios. By doing so, advisers are better able to provide clients with greater certainty that their return targets will be met and, at the same time, lower the possibility of large drawdowns, the foundation of an appealing client-centric business value proposition.

Concurrently, by matching each client's investments with their personal needs, advisers can better demonstrate their compliance with the client's best interest and upcoming Design and Distribution (DDO) obligations, ensuring that their business is primed to meet the challenges stemming from the industry transition.

• Privacy Policy

Dynamic Asset Consulting Pty Limited (ABN 67164 408 191) AFS Licence No: 502623. © Copyright 2018 by Dynamic Asset Consulting Pty Limited - All rights reserved. No reprinting, publication, extracting of copy or any other redistribution of this website content is permissible without the prior consent of Dynamic Asset Consulting Pty Limited.

The Leading Source of Insights On Business Model Strategy & Tech Business Models

Wealth Management Business Model

Under the wealth management business model , financial advisors provide expertise to mostly affluent clients who may be individuals, families, businesses, or organizations.

Table of Contents

Understanding the wealth management business model

The wealth management business model requires licensed financial advisors to consult with various affluent clients, learn about their circumstances, and then improve or enhance their financial situation.

Wealth managers offer the full gamut of financial services and, at least in theory, can provide virtually any such service that exists.

However, most specialize in areas where they feel most qualified to provide advice such as investing, accounting, retirement, estate planning, and tax optimization.

Fundamental to the wealth management business model is consultation. Indeed, the most effective wealth managers are customer-focused and do not recommend products or services that are inappropriate.

Instead, their primary objective is to determine what is important to the client (and why) and then develop a tailored solution.

On a related note, it should be mentioned that wealth managers provide more than just financial advice.

Instead of a piecemeal approach where multiple products from various financial professionals are combined, wealth managers recognize that affluent individuals are better suited to an integrated approach.

The responsibility of the financial professional, in this case, is to coordinate the various products and create a plan that is sensitive to the client’s current and future needs.

Wealth management fee structure

Wealth managers collect advisor fees in a few different ways.

Fee-only advisors charge flat, hourly, or annual fees, while others are compensated via commissions they collect from the investments they sell.

Some managers utilize a hybrid approach, earning a mixture of investment commissions and fees.

The most common fee structure tends to be an annual fee that is charged as a percentage of the total funds under management .

In 2021, for example, advisors collected a 1.02% fee (equivalent to $10,200) for managing an investment amount of $1 million.

Fees work on a sliding scale such that the more money is invested, the lower the amount a wealth manager charges.

What’s more, active managers who buy, hold, and sell securities in a bid to outperform the market will also collect a more substantial fee than those who passively manage portfolios.

Value Proposition

• Financial Planning Expertise : Wealth management firms offer personalized financial planning and investment advice tailored to the individual needs and goals of clients. By leveraging the expertise of financial advisors, these firms provide comprehensive wealth management strategies to help clients build, grow, and protect their assets over the long term.
• Diverse Investment Options : Wealth management firms offer access to a wide range of investment options, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), real estate, and alternative investments. By diversifying clients’ portfolios across various asset classes, wealth managers aim to optimize risk-adjusted returns and achieve investment objectives.
• Customized Wealth Solutions : Wealth management firms design customized wealth solutions and investment portfolios based on clients’ risk tolerance, time horizon, financial situation, and investment preferences. Whether clients seek capital preservation, income generation, or wealth accumulation, wealth managers develop tailored strategies to meet their unique needs and objectives.
• Holistic Financial Services : Wealth management firms provide holistic financial services beyond investment management , including retirement planning, estate planning, tax optimization, insurance solutions, and philanthropic planning. By addressing various aspects of clients’ financial lives, wealth managers help clients achieve financial security, retirement readiness, and legacy planning.

Revenue Model

• Asset-based Fees : Wealth management firms typically charge fees based on a percentage of assets under management (AUM). These asset-based fees are calculated as a percentage of the client’s total investable assets and are assessed annually or quarterly. As clients’ portfolios grow in value , wealth managers earn higher fees, aligning their interests with those of their clients.
• Performance-based Fees : Some wealth management firms may also charge performance-based fees, whereby they earn a percentage of the investment gains achieved above a certain benchmark or threshold. Performance fees incentivize wealth managers to generate positive investment returns for clients, as their compensation is tied to investment performance.
• Financial Planning Fees : Wealth management firms may charge separate fees for financial planning services, such as retirement planning, estate planning, and tax planning. These fees may be charged on an hourly basis, a fixed fee for a comprehensive financial plan, or as a percentage of the client’s net worth.
• Commissions and Transaction Fees : Wealth management firms may earn commissions and transaction fees from buying and selling securities on behalf of clients. These fees may be charged for executing trades, purchasing investment products, or implementing financial transactions, such as buying or selling real estate or insurance products.
• Marketing Strategy
• Client Referrals and Word-of-Mouth : Wealth management firms rely heavily on client referrals and word-of-mouth recommendations to acquire new clients. Satisfied clients who have experienced positive outcomes from working with wealth managers are likely to refer their friends, family members, and colleagues, generating new business opportunities through trusted relationships.
• Thought Leadership and Content Marketing : Wealth management firms establish thought leadership and credibility in the industry by producing educational content, thought-provoking insights, and market commentary on relevant financial topics. Through blogs, articles, whitepapers, webinars, and podcasts, wealth managers demonstrate their expertise and attract potential clients seeking valuable financial advice.
• Digital Marketing and Online Presence : Wealth management firms invest in digital marketing strategies to increase brand awareness, engage with target audiences, and drive traffic to their websites and online platforms. Search engine optimization (SEO), pay-per-click (PPC) advertising, social media marketing , and email marketing are used to reach and engage with clients and prospects in the digital realm.
• Networking and Professional Associations : Wealth management firms engage in networking activities and participate in professional associations, industry conferences, and community events to build relationships, expand their professional networks, and generate business leads. By establishing a presence in relevant industry groups and associations, wealth managers connect with potential clients and referral sources.
• Distribution Channels
• Personalized Consultations and Meetings : Wealth management firms engage with clients through personalized consultations, meetings, and financial planning sessions conducted by experienced financial advisors. These face-to-face interactions allow wealth managers to assess clients’ financial needs, goals, and risk profiles, and develop tailored wealth management strategies.
• Online Platforms and Client Portals : Wealth management firms offer online platforms and client portals where clients can access account information, investment performance reports, financial planning tools, and educational resources. These digital platforms provide convenient access to wealth management services and enable clients to monitor their portfolios and track progress towards their financial goals.
• Referral Networks and Partnerships : Wealth management firms cultivate referral networks and strategic partnerships with other professionals, such as attorneys, accountants, insurance agents, and real estate agents, who may refer clients in need of wealth management services. By collaborating with trusted professionals and service providers, wealth managers expand their reach and access new client opportunities.
• Seminars and Workshops : Wealth management firms host seminars, workshops, and educational events to educate the public about financial planning, investment strategies, retirement planning, and wealth management best practices. These events serve as marketing channels to attract prospective clients, showcase expertise, and establish credibility in the community.

Wealth management business model credentials

The particular credentials of those operating under the wealth management business model will depend on the country of operation.

In the United States, the most desirable credentials include:

• Certified Financial Planner (CFP) – requiring up to 1,000 hours of coursework and a minimum Bachelor’s level of education.
• Chartered Financial Analyst (CFA) – more relevant to investment research and portfolio management and issued by the CFA Institute. CFA holders must also have four years of prior education or work experience.
• Personal Financial Specialist (PFS) – PFS holders are credentialed by the well-regarded American Institute of Certified Public Accounts (AICPA). In essence, they are certified public accountants (CPAs) with further expertise in all aspects of financial management.

Key takeaways:

• Under the wealth management business model , financial advisors provide expertise and guidance to affluent clients who may be individuals, families, businesses, or organizations.
• Wealth managers collect flat, hourly, or annual fees and commissions from investments. While some choose one avenue over the other, many choose a hybrid approach and collect both.
• The wealth manager business model is characterized by more than just financial advice. Wealth managers coordinate various financial products from different professions and create a plan that satisfies the current and future needs of the client.

Key Highlights

• Definition and Client Base : The wealth management business model involves financial advisors providing specialized expertise to affluent clients, which can include individuals, families, businesses, and organizations.
• Wealth managers offer a comprehensive range of financial services and tailor their advice to enhance clients’ financial situations.
• They specialize in areas like investing, accounting, retirement planning, estate planning, and tax optimization.
• A customer-focused approach is fundamental, where the goal is to understand clients’ needs and develop tailored solutions.
• Wealth managers emphasize an integrated approach, coordinating various financial products to meet clients’ current and future needs.
• Wealth managers collect fees through various methods, including fee-only, commission-based, or a hybrid approach.
• The most common fee structure is an annual fee based on a percentage of the total funds under management.
• Fees are often on a sliding scale, with higher investments resulting in lower fees.
• Active management strategies may lead to higher fees compared to passive management.
• Wealth managers’ credentials vary based on the country of operation.
• In the United States, desirable credentials include Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and Personal Financial Specialist (PFS).
• These credentials require extensive coursework, education, and expertise in financial management and related areas.

Connected Business Concepts

Balance Sheet

Income Statement

Financial Structure Modeling

Tech Modeling

Revenue Modeling

Pricing Strategies

Dynamic Pricing

Price Sensitivity

Price Ceiling

Price Elasticity

Economies of Scale

Diseconomies of Scale

Network Effects

Negative Network Effects

Read Next:  Income Statement ,  Balance Sheet ,  Cash Flow

Main Free Guides:

• Business Models
• Business Strategy
• Business Development
• Digital Business Models
• Platform Business Models
• Tech Business Model

More Resources

About The Author

Gennaro Cuofano

Discover more from fourweekmba.

Subscribe now to keep reading and get access to the full archive.

Type your email…

Continue reading

• 70+ Business Models
• Airbnb Business Model
• Amazon Business Model
• Apple Business Model
• Google Business Model
• Facebook [Meta] Business Model
• Microsoft Business Model
• Netflix Business Model
• Uber Business Model

• Advisor Support

• Early Stage Advisors
• Growth Stage Advisors
• Mature Stage Advisors
• Adopt Technology
• Save Time and Resources
• Strengthen Client Relationships
• Aggressively Scale My Practice
• Become an RIA
• Financial Planning
• Investor Administration
• Sales and Service
• Investment Management
• Transition Support
• Retirement Services for Business
• RIA Services
• Independent Advisors
• Advisor Teams
• Registered Investment Advisors
• Practice Management
• Client Experience
• On Demand Webinars
• Upcoming Events
• Investor Relations
• Philanthropy and Community
• Company Information
• AssetMark Trust

Building a Transformational Client Service Model for Financial Advisors

In the world of financial advising, success hinges on more than just investment strategies and market insights. What truly matters is the client-advisor relationship, a dynamic built upon the pillars of service, trust, performance, and communication. Fall short in any of these areas, and your clients may start exploring other options.

It's vital to share your value proposition right from the outset of the relationship to ensure both you and your clients are aligned in your goals.

So, what do clients want from their financial advisor?

This blog delves into the critical elements of a transformational client service model and why it's the linchpin to a prosperous advisory practice. Let's dive in and discover why providing an exceptional client experience is non-negotiable in today's competitive landscape.

What Do Clients Want From Their Financial Advisors?

The client-advisor relationship is built upon service, trust, performance and communication.

Clients today want to feel heard and valued. People typically turn to advisors to find someone they can trust during both prosperous and challenging times. Your clients are looking for more than just a financial manager to provide numbers on a spreadsheet—they want an advisor who cares about their unique goals and dreams.

If you don't offer the communication and reliability they want, the client may search for another advisor who will provide that support.

Why Is Client Experience Crucial to a Successful Advisory Practice?

The client experience differentiates your practice from the competition. Financial advisors are entrusted with their clients’ financial future and often are an integral provider of other wealth management services, including estate and tax planning and protection services.

A consistent and positive client experience is the foundation of client retention. A financial advisory practice that is unable to provide its clients with a “referrable” experience is one that will lose clients to other advisors who have a better service model.

Generational differences in client experience

Over the past few decades, the number of wealth management products, services and business models have continued to expand. This, combined with a new generation   of clients with better access to information and higher expectations, has led to increased competition in every area.

Younger clients demand personalized service, innovative technologies, 24/7 account access, and more. Additionally, they are more focused on ESG (Environmental, Social & Governance) adoption: A recent study shows that more than 80% of millennials believe ESG is an integral part of their investment strategy and are willing to sacrifice returns by holding ESG-rated investments.

Quick Assessment: Is your practice really putting clients first?

No doubt, most financial advisors believe their client engagement skills are good. It’s difficult to be objective about how good you are at doing your job. But there are questions you can ask yourself that, as long as you are honest about the answers, will reveal important information about your client service model and its effectiveness:

Are your existing clients referring their friends and family to you?

The best indication that your clients are happy is their willingness to refer you to others. If your clients are not sending business your way, it’s a sign that you need to step up your client engagement game.

Do you communicate with clients regularly (and not just for portfolio reviews)?

It’s been said that the majority of clients who leave their financial advisors do so because of a lack of communication. In fact, 39% of retail investors participating in a recent study consider it extremely important that their advisor maintains an appropriate amount of contact with them. 1

1 Cerulli Edge, U.S. Advisor Edition,  Cerulli Associates,  3Q 2022 (76), 2022.

Do you demonstrate your appreciation for their business?

Are you letting your client know you are grateful they’ve decided to work with you? It’s important for clients to feel appreciated. Hosting client appreciation events or educational webinars is a great way to engage clients and show that you value them.

Do you solicit client feedback—and act on it?

Whether it’s an annual (or semi-annual) survey, a “comments” section on your website, or interactive social media accounts, do you have a way to gauge client sentiment? Clients appreciate advisors who care about their opinions. Importantly, do you have mechanisms in place to respond to client comments?    

What Is a Client Service Model?

For financial advisors, a client service model is the structured framework that guides how they interact with clients, manage relationships, and deliver services. It serves as a blueprint for understanding client needs, setting expectations, and ensuring consistent and high-quality service delivery.

A client service model typically outlines the entire client journey—from the initial meeting, where expectations are established, to the ongoing support provided. This model should include details on how often advisors will meet with clients, the mediums of communication (in-person, phone, email, or video calls), and the specific services offered at each stage of the relationship. You can also incorporate how you plan to handle client emergencies or unexpected events, ensuring a well-rounded approach to client care.

A well-structured client service model helps build stronger relationships and ensure that clients receive consistent, personalized, and effective financial advice. By clearly defining the steps and touchpoints in the client journey, advisors can tailor their services to meet individual client needs, enhancing satisfaction, loyalty, and the overall client experience.

Best Practices: Wealth Management Client Service and Retention

1. create a service matrix for clients and client support standards for your staff.

Have a formal document for each client that outlines what services you’ll provide them, products, all fees, meeting schedules, etc. Revisit and update the matrix as needed. For staff, written procedures and responsibilities can ensure smooth business operations and better customer service.

2. Define your desired outcomes and methods for measuring success

Models can differ between – and within – businesses. However, components of each client service model should be SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound). A SMART client service model allows you to define how you will determine success, making it possible to adjust your service model if it doesn’t support your overall goals for client satisfaction.

3. Communicate early and communicate often

Communication is central to your service offering. It reminds clients they are top of mind for you and assures them you are looking out for their interests. Share your value proposition with clients at the beginning of the relationship to ensure you and your client are on the same page. Reach out regularly and communicate proactively so your clients aren’t left only seeking you out when they are feeling frustrated or concerned.

4. Engage your clients’ families

Connect with the entire family and find out how to best support them. This could include financial literacy courses, college savings accounts, or special interest investing. Engaging the whole family helps you get a broader overview of your client’s life. Not only is it a wise business-building tool to gather new next-gen clients , but it also helps you retain assets when your client passes down their estate .

5. Proactively reach out to clients in times of market volatility

Difficult times are when a client relationship either flounders or strengthens. In times of uncertainty, clients are anxious. Proactively reassure them and answer all of their questions.

6. Provide educational resources and webinars

Be invested in your clients’ knowledge. It not only benefits their financial literacy; it helps you to set expectations and encourages clients’ engagement with their planning.

7. Keep track of important life events and reach out to see how you can help

Often, when a life event occurs, clients don’t realize the impact it could have on their financial planning. Or, they do realize it but don’t have the time or ability to reach out to you. So, reach out to them. Financial advisors uncover impending life events during account reviews. Make a note of it and follow up. Clients appreciate you being proactive, and it’s an opportunity to earn more business.

3 Tools To Optimize the Client Experience

Time is your most valuable commodity. Having the time to build and maintain strong client relationships is the single most important thing you can do to optimize each client’s experience with your advisory firm. Below are three ways you can optimize your time:

1. Outsource portfolio management

Though time-consuming, portfolio management is not the differentiator it once was. Outsourcing the management of client assets not only allows you to leverage the skills of research and investment experts but it has also been shown to increase client satisfaction .

2. Automate your marketing

Staying in front of your clients can be a challenge, especially as your book of business grows. Leveraging a marketing platform that can integrate with your CRM to create email campaigns and outreach programs. Complement this technology with the personalized support of a consultant who can help drive productivity and results.

3. Segment clients

Each of your clients has unique needs. Segmentation allows you to separate clients into smaller, more manageable groups so you can create a tiered service model framework that equips you to deliver the right service to each client.          

Putting Your Clients First

In the ever-evolving landscape of financial advising, one thing remains constant: the paramount importance of the client-advisor relationship. Putting clients first and ensuring their satisfaction are the cornerstones of a thriving advisory practice.

So, whether you're fine-tuning your service model, enhancing communication, or considering outsourcing to optimize your time and provide more value, remember that your dedication to client service can set you apart in this competitive arena. Your commitment to their financial well-being will foster long-term relationships and fuel the growth and success of your financial advisory practice.

Would you benefit from outsourcing asset management or other elements of your practice? Find out how a TAMP can help you provide a better client experience that supports your service model.

5 Keys to Managing High-Net-Worth Clients

Sec marketing rule: a simple guide to compliance, 7 client appreciation event ideas that people will talk about, the high-net-worth client: position yourself to check their boxes, the ultimate guide to financial advisor marketing, popular topics.

• Business Growth
• Career Development

Subscribe for Updates

Get a monthly update of the top articles published every month.

AssetMark is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses.

Digital Client Prospecting: A Guide for Financial Advisors

The art of effective cash management: optimizing liquidity, risk, and returns, 11 common challenges of going independent as an advisor, sign up for your digest.

Subscribe to get a monthly recap of AssetMark blog articles.

• Finance Planning
• Administration
• Sales & Service
• Improve Your Practice
• Regulatory Updates

AssetMark, Inc. ("AssetMark") is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses. The information on this website is for informational purposes only and is intended as an overview of the services offered to financial advisors, not a solicitation for investment. Information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change.

Advisors seeking more information about AssetMark’s services should contact us ; individual investors should consult with their financial advisor.

AssetMark is an investment adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of AssetMark Financial Holdings, Inc. (NYSE: AMK) of which Huatai Securities Co., Ltd. is a controlling shareholder. Visit our ownership page for more information.

© 2024 Copyright AssetMark, Inc. All rights reserved. (101424 | C20-16871)

Finding a financial adviser can be daunting. We rank the top firms.

The stock market, not to mention life itself, has been a roller coaster over the past few years.

In rinse-and-repeat-like cycles, stocks have tumbled as the pandemic, inflation or the Federal Reserve’s interest rate hikes have darkened the economic outlook – and rebounded as the pandemic or inflation have eased and the Fed has forecast market-friendly rate cuts.

After hitting record highs, markets have wobbled again in recent weeks amid an inflation flare-up that has sparked concerns over whether the Fed really will lower rates this year.

What’s the average investor to do?

Many experts say the answer is simple: Find a registered investment adviser (RIA) that you like and that fits your financial profile. RIAs are companies with a fiduciary duty to always act in their client’s best interests. They charge fees rather than sales commissions and employ investment adviser representatives (IARs) who are licensed to give financial advice and are increasingly taking a holistic approach to their clients’ financial lives.

Other financial firms, such as broker-dealers, earn commissions from selling stocks, bonds, or mutual funds and need only provide suitable advice. Sometimes they may sell more expensive products that generate more revenue but don’t necessarily meet a person's long-term goals.

To streamline your search for an adviser, USA TODAY has partnered with market research firm Statista for the second straight year to rank the top 500 RIAs in the searchable lists below.

That’s no mean feat: There were 32,600 RIA firms at the end of 2022 that managed about $115 trillion in assets. About 99% of the money is overseen by 15,100 larger companies registered with the Securities and Exchange Commission, according to the Investment Adviser Association (IAA), a trade group for RIAs. The remaining 17,500 RIAs each manage less than $100 million and are registered with state agencies.

The ranking is based on the growth of the companies’ assets under management (AUM) over the short and long term and the number of recommendations they received from clients and peers.

This year, besides providing an overall ranking, USA TODAY and Statista included separate groupings based on the amount of assets RIAs oversee so readers can compare firms in similar size classes.

Smaller companies may have fewer clients per adviser and provide more personal service, though that’s not always the case. Larger firms may be able to charge lower fees because of volume-based discounts or have more resources for specialized services.

You also might want to choose a firm based on its location, which is included in the rankings.

The top-ranked company, New York City-based Westfuller Advisors, saw its assets grow 58% in a year and 69% over five years. No. 2 Align Impact, of Santa Monica, California, is in a smaller size category but its assets more than doubled in a year. Cary Street Partners of Richmond, Virginia, 11 th on the main list, garnered lots of recommendations from clients and peers.

RIA’s can serve a vital purpose, particularly when the market and economy are volatile, as they are now, industry officials say.

“When there’s uncertainty in the market, that is when you need advice,” says Gail Bernstein, general counsel of the IAA. “There’s a lot of hand-holding.”

A growing number of Americans who handled their own investments before the ups and downs of the pandemic now want help, says Eileen Stevens, a wealth adviser at Corient Private Wealth, an RIA in New York City.

“They’re saying, ‘It’s hard and scary to do it on my own,’” Stevens says.

And while some people just want an RIA to manage their investment portfolio, most are looking for more comprehensive financial services that include retirement, estate and tax planning as well as bill paying and a college ­­savings roadmap in some cases, Stevens says.

Such a sweeping approach, she says, can not only maximize investment returns but also map out a life strategy that may include starting a family or buying a house.

During market downturns, some people panic and want to immediately sell stock holdings, Bernstein of IAA says. Investment advisers, she says, may “talk them off the cliff” and tell them “to just sit tight.”

“They might say, ‘You’ll need that money in six months because you have a college payment coming up,’” Bernstein says.

RIAs typically charge an annual percentage of the assets they manage, often about 1%. Someone with a $100,000 portfolio then would pay about $1,000 a year. An adviser typically would oversee the money throughout the year, buying and selling securities based on the client’s overall goals. RIAs typically require minimum investments, such as $100,000 or $500,000, though in most cases a custodian such as a bank or broker-dealer holds the cash.

Advisers also can charge a fixed annual fee no matter how much you invest, a flat fee based on the one-time preparation of a broad financial plan, or an hourly fee.

Many RIAs specialize in market niches that require more nuanced knowledge of their clients’ needs, such as athletes, restaurant owners, divorcees, medical professionals, or Generation Z members.  

A growing share of people in their 20s are seeking financial advice, Stevens says, including freshly minted tech or hedge fund executives who accumulate wealth early in their careers.

Some young adults want guidance on how to strike a work-life balance that allows them to use their savings for trips or other experiences, she says. Others want to ensure their investments meet environmental, social and governance goals.

Young investors are also helping drive the popularity of robo-advisers, digital platforms that create portfolios based on algorithms at low cost with little or no minimum investment. But those that are RIAs must still serve the client’s best interest.

“The obligation is still the same,” Bernstein says.

You can learn more about a firm’s specialties and background on its website as well as from the firm’s Form ADV, which it files with the SEC. You can verify a firm's registration with the SEC’s  Investment Adviser Public Disclosure tool  and check the backgrounds and any disciplinary actions at the Financial Industry Regulatory Authority’s (FINRA's)  BrokerCheck  website.

Further details about Statista’s methodology and contact information may be found on  Statista's website .

Advancing Knowledge in Financial Planning

• Close Search
• Live Webinars
• Financial Planning Value Summit
• Digital Marketing Summit
• Business Solutions
• Advicer Manifesto
• AdvisorTech
• FinTech Map
• AdvisorTech Directory
• Master Conference List
• Best Of Posts
• CFP Scholarships
• FAS Resources
• How To Contribute
• Financial Advisor Success
• Kitces & Carl
• Apply/Recommend Guest
• Client Trust & Communication
• Conferences
• Debt & Liabilities
• Estate Planning
• General Planning
• Human Capital
• Industry News
• Investments
• Personal/Career Development
• Planning Profession
• Practice Management
• Regulation & Compliance
• Retirement Planning
• Technology & Advisor FinTech
• Weekend Reading

• CE Eligible
• Nerd’s Eye View

Please contact your Firm's Group Admin

IAR CE is only available if your organization contracts with Kitces.com for the credit. Please contact your firm's group administrator to enable this feature. If you do not know who your group administrator is you may contact [email protected]

Three Financial Planning Business Models To Effectively Serve Gen X And Gen Y Clients

March 4, 2013 12:03 pm 13 Comments CATEGORY: Practice Management

Executive Summary

As the financial planning profession continues to grow, it also continues to struggle to reach and effectively serve Gen X and Gen Y, as most planners tend to focus their businesses on baby boomers - no great surprise, given that baby boomers both control the most wealth in the country, and that most financial planners themselves are baby boomers and simply find it comfortable to serve their peers.

Nonetheless, the reality is that it's actually quite possible to build business models that can effectively serve at least a fairly wide swath of Gen X and Gen Y, whether on an AUM basis by serving the "emerging affluent" clients that larger RIAs reject, an ongoing retainer basis to provide as-needed guidance in an ongoing planning relationship for the cost of a gym membership and cable TV, or even using a more "traditional" comprehensive financial planning business model that simply combines a modest level of assets-under-management with implementing the basic life and disability insurance which those in their 20s, 30s, and 40s will need anyway.

Ultimately, the true challenge of building a successful firm to serve Gen X/Y clients is not really about the business model, per se, which can easily produce a healthy personal income at a reasonable 100-150 clients, but instead how to grow and get to that number of clients in the first place. In other words, while designing the right business model helps, in the long run the real problem serving Gen X and Gen Y is a marketing problem . However, given how underserved the younger generations are right now, simply differentiating yourself by establishing a niche practice focused on Gen X and Gen Y clients may itself be an effective marketing cornerstone for growing a successful business to serve them!

Author: Michael Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth , which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners , a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network , AdvicePay , fpPathfinder , and New Planner Recruiting , the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com , dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Read all of Michael’s articles here .

Monthly Retainer Financial Planning For The Price Of A Gym Membership And Cable TV

Financial planning retainer models have already been gaining some popularity in recent years , although most commonly as an alternative to AUM pricing for firms that are struggling to manage profitability in the face of volatile markets and volatile revenues. The core value of this business model is to apply the same principle of the retainer model, but simply do it at price points accessible to Gen X and Gen Y.

This business model has the simple goal of providing a retainer-style financial planning relationship for an ongoing cost of $100/month, which is roughly the average cost that most people pay for a gym membership and cable TV (about $50/month each, depending on your geographic locale). In point of fact, "financial planning for the price of a gym membership and cable TV" can actually be the tagline for the business, as providing a comparison anchor point for the cost of your financial planning services is an effective marketing technique . At a revenue price point of $1,200/year, a target capacity of 150 clients generates $180,000/year of revenue, a pretty healthy income for a business with very few costs. It may not be a business you can sell for very much, but frankly that's really a challenge most financial planning businesses have faced for years ; nonetheless, it's a healthy living that can grow over time with additional clients and/or by increasing your pricing as your clients increase their income and wealth too.

Notably, this business model can also be done on a standalone hourly basis, but hourly models make prices highly salient and can cause clients to keep questioning whether each problem/question they have is really worth being "on the clock" for an answer; by contrast, a retainer model encourages clients to keep asking questions and utilizing your services (since it's part of the retainer anyway), helping to ensure that once clients are set up for an automatic recurring retainer charge (either via bank draft or credit card), they remain happy and well-served clients for the long run.

As with a typical retainer arrangement - just with  a monthly retainer structure that fits better into the month-to-month cash flow of a younger clientele - services would be provided on an as-needed basis with clients, anticipating some busy points at the end of the year (reviewing employee benefits decisions for the upcoming year) and perhaps during tax season. But more broadly, advice will cover all of the cash flow, tax, insurance, and [simple] estate planning matters that are common to those in their 20s, 30s, and 40s (Gen X and Gen Y). To keep the business efficient, and to manage utilization, most questions/issues/meetings could be handled via email, phone call, and video conference, which also opens up the potential for working with clients outside your local geographic area; not only is there little need for in-person meetings in most situations, but the reality is that aside from an introductory meeting (for clients who are local), most tech-savvy Gen X or Y clients will likely appreciate the flexibility of a tech-savvy advisor that uses the available tools and technology of today!

This also means that beyond some financial planning and CRM software, a website, an email account, a phone number, and video conferencing capabilities, your business will have virtually no overhead costs! You may not even need an office! In addition, the business model is rather simple from a compliance perspective, as it can be done with just a state RIA registration. There will be no actual assets under management, and no product implementation, so there is no need for the cost or hassle of a custodian or broker-dealer, and much of the essential state RIA compliance can be outsourced or templated (e.g., RIAinaBox ,  RIA Compliance Consultants , or RIA Compliance Group ) given the simplicity of services involved. (Technically, if no investment advice is given, setting up an RIA might not even be necessary, although many clients may wish for guidance on their portfolios and 401(k) allocations, so getting the RIA set up is a good idea.)

As with other monthly-cost business models outside the financial services industry (including the aforementioned gym membership and cable TV), the reality is that particular clients will need your services more in some months, and less in others, and may even go long stretches without any questions at all; as long as the total needs of clients match up with the capacity to answer their questions, and the revenue is reasonable, though, the business model works just fine. Especially since your prospective clients have probably never seen anyone else offer services like this, as there are still relatively few Gen X and Gen Y planners offering such services , which means you will likely have virtually no competition!

Comprehensive Financial Planning Services Via An RIA And Insurance License For Today's Young Professionals

In this second business model, the goal is not just to provide (and be paid for) advice, but also to provide (and be paid for) the implementation of the client's financial planning needs, including both the investment and insurance product needs common to today's emerging Gen X and Gen Y affluent. The core value of the business would remain financial planning, with recommendations crafted through an appropriate fiduciary process; nonetheless, proper financial planning recommendations do lead to a need to implement the recommendations, which is how the planner under this model gets paid.

This business model relies on a state RIA registration, and a state insurance license, to implement the investment portfolios (on an AUM basis), term insurance, and disability insurance most commonly needed by those in their 20s, 30s, and 40; after all, the clients are going to have to implement after receiving your advice, and the cost of a particular term insurance policy is the exact same whether they buy it from you or via TermInsurance.com (but you earn a couple hundred dollars for implementing)! Average revenue per client might be anywhere from $1,000 to $3,000 per year, depending on the depth of services and the particular implementation needs of the client, leading to a potential gross revenue that averages about $300,000 with a "full" 150 clients (albeit with some income volatility given a smaller AUM base and some fluctuating needs for insurance products from year to year). Notably, because no commissionable securities products are used - i.e., no commissioned mutual funds, variable life insurance, or variable annuities - there would be no need for a broker-dealer relationship. Just an RIA for the investment management fees (along with a relationship with an investment custodian), and a state insurance license (along with a relationship with a life insurance brokerage general agency ).

Ideally, this business model should be implemented with a more clearly defined niche; it could be tied to a particular large employer in the area, a certain type of business or industry that's popular (e.g., computer programmers in Silicon Valley, or young doctors at the area hospitals), or simply a common planning scenario (e.g., parents starting a family and having their first child). The key is that by having a niche, you will be able to clearly demonstrate yourself as an expert in the particular type of clients you (wish to) work with; otherwise, you will struggle to bring in clients competing with every other local young insurance agent or mutual fund salesperson. In addition, having a clear niche makes you more referrable  to prospective clients.

Notably, this business model could be attached to the preceding one, with a retainer to provide an initial baseline of income. However, the reality is that if there is already opportunity to generate revenue by implementing recommendations for clients, there isn't necessarily a need to charge clients upfront or on an ongoing basis as well; instead, that may lead to ultimately charging them more than is necessary, or cause them to balk at an upfront retainer fee and not engage in the planning work that would have led to more revenue implementing solutions that the clients needed anyway ; in other words,  it's not just how much you charge, but also making good decisions about how you charge, and the saliency of your pricing model , that ensures the success of the business.

Wealth Management For The Emerging Affluent As A State-Registered Investment Adviser

The greatest irony to the number of RIA firms that have $1,000,000+ investment management minimums is that virtually all of them started with much lower minimums, and were able to serve those clients profitably enough to not only be successful and survive as a business, but thrive and grow to the point where the firm could establish higher minimums! Thus, the core value of this business model is simply to get "back to basics" - providing wealth management in the form of comprehensive financial planning plus investment management services to today's emerging affluent, who might "merely" have $100,000 - $500,000 of assets to manage, rather than a million or few.

This business model would start with a state RIA registration, and requires a relationship with a custodian that will be friendly to a new start-up RIA (such as TD Ameritrade Institution , ScottTrade Advisor Services , or SSG ), and setting up a fee schedule that might be 1% to 1.5% of AUM (typical for "lower" levels of net worth). Given the available assets of clients involved, this would lead to revenue of $1,500 to $5,000+ per client, which actually means this business model may ultimately be able to generate the widest profit margins as it grows to gross revenue that may reach $500,000 or more for the same 150 "maximum" number of clients . Notably, this model will (or should) still have some asset minimums, and from that regard it may be more limited in the number of potential clients than the preceding models. On the other hand, the reality is that there's still a wide swath of "mass affluent" individuals, many of whom are Gen X (and perhaps some Gen Y), with at least $100,000 but less than the minimums of large RIAs.

As with the preceding model, having a clear niche will help this model to succeed , although ironically one of the best "niche" opportunities is to simply develop relationships with other RIAs in the area that have higher minimums, to demonstrate that your firm is ready and willing to provide quality financial planning and investment management services to those clients who don't meet the larger firm's minimums. By building relationships with key firms and centers of influence within the local membership associations (e.g., FPA, NAPFA, or SFSP) it's possible to generate a flow of new clients simply via referrals from other advisors, who are often happy to refer out the clients below their minimums to peers who they trust will do a good job!

In addition, this business can also be overlaid with the first model - offering a minimum ongoing retainer for any clients who want to work with the advisor, which is replaced by AUM fees as the client's investment assets grow. However, as I've written in the past, all else being equal an AUM model will tend to be more financially successful than a retainer model , so the point here would be for a retainer to provide a minimum fee per client for what is otherwise still primarily an AUM model. It's also worth noting that creating business models that have too many choices for how the advisor gets paid can also be problematic, as clients become paralyzed by the " Paradox of Choice " and become unable to make a decision at all; in other words, simplicity reins in this regard, and represents an opportunity to help clients through their sometimes irrational decision-making process , so the model shouldn't offer too many different choices at once that may be confusing to both prospective clients and potential referrers.

Growing A Successful Gen X/Y Practice

Ultimately, the reality is that it's not actually that difficult to create a business model that can effectively serve Gen X or Gen Y and still be profitable, especially if the business is built lean from the start with a goal of establishing a steady income for the owner. All of these business models can generate a reasonable amount of net income for a financial planner, with some or all of the income recurring annually for further stability. And while the value proposition for Gen X and Gen Y clients is somewhat different than traditional models , it's not necessarily  that  difficult to deliver.

Instead, the key - or alternatively, the great challenge - of building a successful practice is really about the ability to market and grow the practice to generate a sufficient number of clients in the first place. In fact, the reality is that "marketing challenges" is already the primary reason that financial planners fail to serve the majority of Americans ; simply put, the difficulty is not how to be profitable serving the majority of Americans, but how to reach enough of them to serve  in the first place. Accordingly, this article suggests not only some business models, but also some guidance about how to market and position them, which can then be supplemented by networking and referral strategies , social media and blogging based inbound marketing strategies for financial planners , and more. Although without a doubt, the rise of technology and the digital age for financial planners , with the explosion of outsourcing options, makes it easier than ever to build a profitable practice focused on Gen X and Gen Y!

March 4, 2013 at 1:27 pm

Great article Michael!

It absolutely can be done, just as you outlined above. At least half of my client base fall in the Gen X/Y demo (I suppose I should know my metrics off the top of my head!). I’ve used all 3 approaches you describe, although over the last 7 years I have not sold insurance, so I am currently working with Gen X & Y under your #3 model, with #1 added on for lower AUM clients.

There is a huge desire for and opportunity to provide financial planning to Gen X & Y.

March 4, 2013 at 2:56 pm

Great article. Have never seen models outlined quite so clearly before. One of the other benefits of working under these models, is that many Gen X/Y clients may eventually “graduate” to higher levels of planning and/or investment management as they age, leave jobs, retire, etc.

March 4, 2013 at 6:09 pm

Incredible article Michael Kitces! I really enjoyed how you laid out three different business models that can all be intertwined with each other, if needed.

I agree that marketing is the hardest part and I’ve found that when just helping my young friends immediately out of college figure out employer benefits and other things, they love using google hangouts to meet. It allows them to see my screen and how I do what I do if it’s in excel, etc.

Do you think it’s possible that current business owners/advisors will want to seek out these younger clients? What if they have a young planner or soon-to-be planner on board? Is this a good way to get the new, younger advisors business?

I can tell you that I enjoy working with older people but love working with and educating young people. If you educate people earlier, they may be “better” AUM clients down the road as they hopefully save more and as a result, their assets grow faster and quicker than if they didn’t get advice while they were young and therefore, didn’t start saving until later!

Great article!

March 7, 2013 at 8:01 am

Michael..brilliant piece..I think the business models are universally applicable in other countries too!! You have put in enormous effort to make advisers understand that it makes sense to serve the Gen X and Gen Y by Independent Advisers. Institutions like LearnVest are doing brilliant work in this area! I am a fan of Learnvest and I believe that financial planning as a service can be served to millions of Gen X and Gen Y at an affordable price through effective combination of technology and people.

This piece has been extremely motivating and inspiring!! Thank you!

April 22, 2013 at 12:39 pm

Just FYI, Folio Institutional is another custodian with no minimums as far as I know. Very unique platform also for the PM/RIA crowd…

February 11, 2015 at 5:08 pm

I concur with others’ sentiments, and wonder whether you’ve looked at management issues such as churn (i.e. renewal rates of less than 100%), cancellation policies (i.e. at any time or with notice?), auto-pay failures, or other operational ‘headaches’ that stem from the retainer models.

November 5, 2016 at 10:21 am

Hi, I developed that app to help people calculate and analise loans, it would be awesome if you tried it and gave me some feedback so I can improve it and add more functionalities: https://goo.gl/YTGOKe

January 30, 2018 at 1:08 am

Once again, so much value in one article. Thank you for this! Being an independent insurance agent, looking to go remote and fully switch to online planning/coaching. Being in my 20’s myself, I feel like I can connect and do it well.

Enjoy the current installment of “weekend reading for financial planners” – this week’s issue starts off with a look at how financial planning may be different by 2023 (and the trends driving those changes), from the rise of Gen X and Gen Y to t

[…] Three Financial Planning Business Models To Effectively … – As the financial planning profession continues to grow, it also continues to struggle to reach and effectively serve Gen X and Gen Y, as most planners tend to focus …… […]

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

• About Michael
• Career Opportunities
• Permissions / Reprints
• Disclosures / Disclaimers
• Privacy Policy
• Terms of Use

Showcase YOUR Expertise

How To Contribute Submit Podcast Guest Submit Guest Webinar Submit Guest Post Submit Summit Guest Presentation

Stay In Touch

General Inquiries: [email protected]

Members Assistance: [email protected]

All Other Questions, Or Reach Michael Directly:

This browser is no longer supported by Microsoft and may have performance, security, or missing functionality issues. For the best experience using Kitces.com we recommend using one of the following browsers.

• Microsoft Edge
• Mozilla Firefox
• Google Chrome
• Safari for Mac

Friend's Email Address

Your Email Address

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• For Subscribers
• Write for Entrepreneur
• Entrepreneur Store
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

How to Choose the Right Financial Advisor — A Guide for Entrepreneurs Use this guide to select a financial advisor who not only understands your unique financial needs but also has the expertise, experience and connections to support your business and personal goals effectively.

By Shirl Penney • Apr 26, 2024

Key Takeaways

• Business owners need advisors who offer more than just trading skills; they should also assist in goal planning, risk management and legacy establishment.
• Advisors who grasp the unique demands of entrepreneurship are often entrepreneurs themselves.
• When selecting a financial advisor, entrepreneurs should prioritize finding someone with relevant experience guiding clients through various stages of business growth, managing unpredictable cash flow, crafting investment strategies and navigating complex tax scenarios.

Opinions expressed by Entrepreneur contributors are their own.

Because you're a business owner, your financial advisor should know more than how to trade securities. You need an advisor who can help you plan and work toward your financial goals , manage the risks you encounter along the way and build a legacy for the next generation. You need someone who understands the cycles and pressures of entrepreneurship and has a track record to prove it.

Advisors who understand that their entrepreneur clients require more than standard financial services are often entrepreneurs themselves. Entrepreneurial advisors tend to be based in independent "registered investment advisors," or RIAs, overseen by the Securities and Exchange Commission.

In this article, I'll share a few specific things entrepreneurs should look for when choosing a financial advisor .

Related: You Have to 'Date' Your Financial Advisor to Find the Right One — Here Are 3 Tips to Doing Just That.

Look for passion tempered by training and experience

Because they've had experience as RIA owners, these advisors know the stages of business development from startup and early growth through achieving scale and, in some cases, selling the enterprise. Motivated by a fascination with personal finance in the context of business ownership, these advisors either focus on entrepreneurs exclusively or maintain a healthy roster of business-owning clients as a passion project within a broader practice.

Enthusiasm is no substitute for expertise, however. An advisor who can make sense of your business and personal finances has experience managing unpredictable cash flow , crafting investment strategies that complement your business and navigating complex tax scenarios.

An advisor's experience can't be overstressed. Has a particular advisor successfully guided business owners through various stages of growth and increasing complexity? Does this advisor have smart things to say about your industry? If "yes," then it's likely he has navigated challenges similar to those you encounter and can offer advice that's practical and feasible.

Remember, emotion clouds judgment. Knowing your business is everything to you, an entrepreneurial advisor will work to keep you calm and focused — especially when the stakes are high.

Find an advisor who gets business and has connections

Some advisors who specialize in business-owning clients enjoy working with entrepreneurs from a variety of business types, while others prefer going deep into specific niches. The generalist can draw on varied scenarios when formulating solutions for your business, while the specialist enjoys the advantages of concentration — namely expertise and credibility — in your line of business.

The choice will depend on your field and your circumstances. Are you looking for an advisor versed in early-stage fundraising for technology startups, exit-planning options for dentists, or the needs of a franchise restaurant owner in fast-growth mode? The answer should color your selection.

An advisor suited to an entrepreneur like you will have strong connections in finance and finance-adjacent spheres outside wealth management. After all, advisors who can call on investment bankers , tax professionals, insurance consultants and legal experts can put you on solid ground when it comes to spotting industry trends, devising valuation strategies, managing risk and keeping everything on the up-and-up when it comes to tax and estate planning. An advisor with working relationships in these spheres can provide full-spectrum financial insights on your enterprise and perhaps open doors to broader business opportunities.

Related: Is Your Financial Advisor Right For You? Here's A Simple Test To See If It's Time To Move On.

Use these tips to find an advisor you can trust

A major factor in evaluating financial advisors is their potential as a long-term partner. Entrepreneurs should vet potential advisors by asking for references from other clients in similar business phases or industries. These insights can tell you a lot about the advisor's capabilities, work style and overall responsiveness.

Taking the time to check an advisor's professional certifications, compliance history and status as a fiduciary (viewable online at BrokerCheck ) are also essential steps for choosing a wealth manager. Fiduciaries, such as RIA-based advisors, are constrained to put their clients' interests first. Stockbrokers, meanwhile, adhere to a lower standard stipulating only that their advice be broadly "suitable." If you're still unsure whether your advisor is a fiduciary, ask for a signed pledge that will act for you in a fiduciary capacity.

An advisor's transparency about fee calculation and openness about the advisor's compensation sources are significant trust builders and must-haves for avoiding conflicts of interest. It's also critical that the relationship be collaborative. From the start, you want an advisor who proposes solutions that mesh with your personal and business goals. This shows the advisor has already taken time to understand your values and risk appetite and that they aim to provide meaningful advice.

Put "works well with me" at the top of your list

To assess this alignment, start by sharing your vision for and expectations of the relationship. Probe the advisor's investment philosophy and her approach to financial planning and portfolio construction in the context of business ownership. Ask how she tailors her advice to meet the specific needs of entrepreneurs, with case studies and anecdotes to illustrate her concepts. Meeting the team that supports the advisor can also provide insights into the depth and breadth of expertise the advisor's firm offers.

As mentioned, having experiences in common as business owners can support long-term collaboration between you and your advisor. Advisors who run their own businesses possess insight into the challenges and opportunities you face as an entrepreneur, resulting in appropriate advice.

Related: The Truth About Your Financial Advisor

Comprehensive advice for business owners should go beyond business and investment considerations. For most of us, after all, money is just a tool to help us accomplish our personal, family and philanthropic goals. A skilled advisor integrates these personal aspects of financial management with the business to ensure actions taken bolster other important facets of the entrepreneur's life.

Finding the right financial advisor is a crucial step for entrepreneurs eager to improve their financial health and make the most of their opportunities. A suitable advisor blends industry knowledge, experience, networking capabilities and a deep understanding of entrepreneurship. By choosing an advisor who can act as a partner, entrepreneurs can achieve financial strategies that support equally their business and personal goals.

Entrepreneur Leadership Network® Contributor

President and CEO of Dynasty Financial Partners

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building
• They Designed One Simple Product With a 'Focus on Human Health' — and Made $40 Million Last Year
• Lock Younger Americans Don't Necessarily Want to Retire in Florida — and the 2 Affordable States at the Top of Their List Might Surprise You
• I Tried Airchat , the Hottest New Social Media App in Silicon Valley — Here's How It Works
• Lock This Side Hustle Is Helping Farmers Earn Up to $60,000 a Year While Connecting Outdoor Lovers With Untouched Wilderness
• Are Franchises in the Clear After the Expanded Joint Employer Rule Was Struck Down? Industry Experts Answer 2 Critical Questions About What's Next.

Most Popular Red Arrow

I went on a retreat to reignite my entrepreneurial passion. here's what i learned that will forever change the way i lead..

An international adventure could be exactly what you need to achieve your entrepreneurial goals.

How to Turn Workplace Conflict into a Strategic Advantage

Conflict is present in all organizations and takes numerous forms. Here's how organizations can harness conflict to create better outcomes and healthy conflict management cultures.

3 Secrets to Starting a Small Business Side Hustle That Gives Your Day Job a Run for Its Money, According to People Who Did Just That — and Made Millions

Almost anyone can start a side hustle — but only those ready to level up can use it to out-earn their 9-5s.

Logan Paul's Energy Drink Company Accused of 'Forever Chemicals,' Excessive Caffeine in Class-Action Lawsuits

Prime Hydration is facing two class-action lawsuits. Paul says the suits are "absolute bull."

How to Choose the Right Financial Advisor — A Guide for Entrepreneurs

Use this guide to select a financial advisor who not only understands your unique financial needs but also has the expertise, experience and connections to support your business and personal goals effectively.

Clinton Sparks Podcast: Shaquille O'Neal's Journey from NBA Superstar to Entrepreneur

This podcast is a fun, entertaining and informative show that will teach you how to succeed and achieve your goals with practical advice and actionable steps given through compelling stories and conversations with Clinton and his guests.

Successfully copied link

Getting New Clients Through Social Relationships: A Declining Model?

Finding Opportunity Amidst the Headlines: The Case for Long-Term Investing

Does your personality influence the sale, active etf growth continues to amaze, treasury cash soars providing a liquidity reprieve, bridging marketing and customer experience: 16 conversation starters, the power of sales scripts in a rainmaker’s succession plan, how advisors can improve communication with clients, tying the knot a second time talk to your advisor.

So many advisors have been taught, that to effectively acquire new clients, they need to tap into their social networks – “low hanging fruit” as told by peers and mentors. They find themselves approaching friends and relatives, attending social events at the local chambers of commerce, country clubs, golf courses, and engaging in conversations over coffee or a meal, patiently waiting for an “in” to start talking about what they can do for them as an advisor.

It’s an awkward moment attempting to insert yourself into the conversation with something to the effect of: “I could take a look at your finances if you’d like” . That’s the moment the person you’re socializing with senses your real agenda, triggering in the back of their mind: “Is he just being friendly with me to try and get my business?”. At that moment, what seems like “low hanging fruit”, suddenly becomes the most difficult, hard-to-reach fruit, at the top of the tree. Coming across as having an ulterior motive, using the social relationship as a lead generation strategy, can often break trust faster than it took to create the relationship in the first place. Crossing social norms into business norms is fraught with “pot holes”, yet relationship-based selling can be fruitful if you’re perfectly happy with an extended and very long sales cycle that is often unpredictable. The theory goes, the more relationships you create within your network, the higher likelihood of landing a new client – which is fine, if playing the “numbers game” is your thing – when ultimately, you’d be happy with just one or two new clients per month.

The key to unlocking this predicament, is not to confuse social contexts with business contexts.

To solve this dilemma, you’ll need to be open to a new client acquisition model that starts with a business context, not a social context. Your doctor doesn’t require you to meet him or her in a social context before your initial consultation. Nor would you want him to.

His process of diagnosing your issues, and helping you understand them more than you did before you met, is how his value is established, as a trusted authority .

Attempting to insert your knowledge and advice, as subtle as it might be, about what you do in a social context, can break the expectations of that social setting, not allowing you to establish your authority positioning.

A peer-to-peer lead generation strategy was a wonderful model before the advisor industry became commoditized. Now, any prospect you meet, with substantial net worth, most likely has an advisor. Attempting to shift them from their current advisor to you, is going to require you to first shift your own thinking, to become a trusted authority (not a trusted advisor, they’re completely different) . A trusted advisor if what you become, after the sale. A trusted authority is what you must become, before the sale .

To learn more about this unique and contrarian trusted authority approach to selling, order your complimentary book and schedule your confidential consultation below.

Ari Galper is the world’s number one authority on trust-based selling and is the most sought-after high-net worth/lead generation expert for financial advisors. His newest book, “Trust In A Split Second” has become an instant best-seller among financial advisors worldwide –  you can get a Free copy of Ari’s book here and, when you click the “YES” button in the order form, you’ll also receive a complimentary “plug up the holes” lead generation consultation.  Ari has been featured in CEO Magazine, Forbes, INC Magazine and the Financial Review. He is considered a contrarian in the financial services industry and in his many books, everything you learned about selling will be turned upside down. No more chasing, no pressure, no closing.

Related:  Are You Over Thinking the Sale?

Should You Opt for an Older or Younger Financial Adviser?

Do you want the wisdom that comes with age or the innovation that comes with youth? Or maybe you can have both, with an advisory team.

• Newsletter sign up Newsletter

Age is a popular subject in the media these days, and we all know why. But age isn’t just debated at the national level about politicians. It’s also discussed closer to home about financial advisers.

If you begin working with a financial adviser when you first start your career, most likely you’ll have a financial adviser for 60 years or more through retirement. It’s unlikely to be the same individual. As Baby Boomers and older Gen Xers contemplate retirement, they’re probably wondering if their financial adviser is doing the same. That thought can be frightening, because our advisers know us so well. They know our hopes, our dreams, our goals and everything about our finances. If you’ve worked with your adviser for years, the thought of losing that individual and their constant, calming influence on your life is bound to be unsettling.

When a financial adviser has had a long career, at some point they’re considered “too old.” On the other hand, an individual who just entered the industry may be considered “too young.” Fortunately, this is an industry that employs both mature and less-seasoned individuals and reaps the rewards of embracing age diversity. Consider the following:

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

With age comes wisdom. When it comes to personal finance, the more things change, the more they stay the same. Look at the stock market: Every significant directional change, be it a rally or a downturn , is triggered by some current economic, political or global event. Upon closer examination, these new events frequently exhibit similarities to past occurrences. More-seasoned advisers who have experienced a similar event in the past are often in the best position to recognize the similarities and have the most valuable advice of how to move forward and about the potential outcomes.

With youth comes innovation. The current stage of the information age is the era of machine learning, a term that refers to artificial intelligence (AI). In 1962, E.M. Rogers introduced the Diffusion of Innovations Theory , which described how new innovations are diffused, or spread, widely among a population or group. Although Rogers didn’t specify age as a determinant of adoption, others have suggested that younger individuals are more likely to adopt new innovations. The youngest members of the workforce, Millennials (1981-1996) and Gen Z (1997-2012), are digital natives. As such, they bring a unique perspective to the financial services industry because they have come of age during a tech revolution, making them open to new investment opportunities with growth potential.

In reality, the financial services industry doesn’t have a “too old or too young” problem anymore, because we have advisory teams.

The benefits of a financial advisory team

Today, the financial services industry estimates that more than half of financial advisers work on teams, and across the industry, that number is increasing. Here are three reasons a team makes sense:

• Continuity. Loss of continuity is one of a client’s main concerns when they think about losing their financial adviser. If your adviser is a member of a team, they are part of a group that share a mission and vision. While you will have a new individual you’ll get to know, everything else should be the same.
• Consistency. Financial advisory team members agree upon the team’s investment philosophy, their roles, the tools they use to make recommendations and the way they measure client success.
• Specialization. The complexity of personal finance makes it difficult for one person to be an expert in everything. The team structure allows individuals to become in-depth experts in one or more areas of expertise. The breadth of the expertise enables them to successfully advise many types of clients and consult with their colleagues on complex client situations.

Finally, many financial advisers who aren’t on teams have informal agreements with other financial advisers who will take over their practice in the event of an emergency. If you work with an adviser who’s a sole practitioner, ask if they’ve entered into that type of agreement with another adviser. If they have, ask to meet that individual so you aren’t taken by surprise.

The views expressed are subject to change and do not necessarily reflect the views of Thornburg Investment Management, Inc. This information should not be relied upon as a recommendation or investment advice and is not intended to predict the performance of any investment or market.

This is not a solicitation or offer for any product or service. Nor is it a complete analysis of every material fact concerning any market, industry, or investment. Data has been obtained from sources considered reliable, but Thornburg makes no representations as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg does not accept any responsibility and cannot be held liable for any person’s use of or reliance on the information and opinions contained herein.

Investments carry risks, including possible loss of principal.

Related Content

• Is Your Financial Adviser Doing a Good Job for You?
• Eight Times You Should Contact Your Financial Adviser
• A Virtual Financial Adviser Could Be the Right Fit for You
• Can I Hire a Financial Adviser to Manage My 401(k)?
• Should I Pay a Financial Adviser an Assets Under Management Fee?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA .

To continue reading this article please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Jan Blakeley Holman is director of advisor education at Thornburg Investment Management. She is responsible for identifying and creating advisor education programs that support financial advisors as they work with their clients and prospects. Jan has spent more than four decades in the financial services industry. Over the course of her career, she’s served as a financial advisor, an advisor to financial advisors and a financial services corporate executive. Visit Thornburg’s website to enjoy more of Jan’s articles and podcasts.

Dividend-paying stocks have lagged lately but are due for a comeback. Here's what to look for in great dividend stocks.

By Kim Clark Published 27 April 24

It's not easy, but you may be able to retire by 40 or 45 if you take these FIRE (Financial Independence, Retire Early) steps now.

By Jacob Schroeder Published 27 April 24

Both prospects are expensive these days, but there are several questions you can ask yourself to help you decide what’s right for you.

By Justin Stivers, Esq. Published 27 April 24

Waiting until 70 to claim Social Security benefits can pay off, so how do you bridge the gap between giving up your paycheck and filing for benefits?

By Ken Nuss Published 26 April 24

A surprising number of young adults live with their parents. Setting some financial ground rules could get the kids out on their own faster.

By Neale Godfrey, Financial Literacy Expert Published 26 April 24

While you’re decluttering your home for spring, consider also taking a crack at cleaning up your finances and old paperwork.

By Tony Drake, CFP®, Investment Advisor Representative Published 26 April 24

Here’s how to use your home equity in combination with an annuity contract to produce late-in-life income.

By Jerry Golden, Investment Adviser Representative Published 25 April 24

Above all, you should choose someone you trust, keeping in mind that acting as a trustee or executor can be a complex, thankless and sometimes long-term job.

By John M. Goralka Published 25 April 24

These strategies are especially for women who are new to managing their money because of divorce or the death of a spouse.

By Emily Glassman Published 25 April 24

AI-driven recommendations can complement human judgment, leading to more rational choices that aren’t as influenced by biases and blind spots.

By Francis Geeseok Oh Published 25 April 24

• Contact Future's experts
• Terms and Conditions
• Privacy Policy
• Cookie Policy
• Advertise with us

Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site . © Future US, Inc. Full 7th Floor, 130 West 42nd Street, New York, NY 10036.