The hit TV series The Bear illustrates a fundamental truth about anything in life worth pursuing: Achieving success doesn’t come easy. Passion, dedication and sacrifice are prerequisites to delivering a superior service experience.
The Bear also reveals another truth: Once achieved, success requires a new set of demands and sacrifices. It’s ironically tragic to these take the chefs out of the kitchen and away from their original passions. Now, a chef focuses on managing staff, sourcing ingredients and ensuring quality brand recognition, all while maintaining the excellence devoted fans have come to expect.
The reality is that any person taking on all these responsibilities is likely too distracted to maintain genuinely elite status in any discipline. And often, if someone does take this on, it spells disaster for the business and customer’s experience. This holds true across any growing business—especially within our industry.
Far too many advisors attempt to control every aspect of their practice in a vain effort somehow to deliver a better client experience. It’s a path paved with good intentions, inevitably leading to the opposite intended result.
When I started an RIA for my client practice in 2014, I quickly realized that the dream of unlimited control was, in fact, a nightmare. Plenty of elite-level businesses in other industries entrust critical business functions to best-in-class service providers. Why couldn’t we have this in the wealth management world?
I created NewEdge Advisors from this revelation.
Fast forward 10 years, and at least 20 firms of significant size and scale offer elite advisors the ability to maintain service levels and client engagement while providing critical best-in-class back office and operational support. Now, you can focus on what made you successful in the first place and maintain complete control and customization over your client experience, all while the back-office efforts required to support that success are handled by equally elite infrastructure.
Advisors do not need to control everything to have the flexibility to serve their clients how they want. After years of going it alone and now serving advisors who made the same choices, an advisor should consider these considerations as they embark on this journey.
The Trade-Offs
Complete Autonomy: Make no mistake, working with an RIA means you will have other people helping and sometimes operating aspects of your practice. You need to decide if that’s something you can accept. You must also consider whether controlling all aspects of your compliance, technology and operations are core elements of a successful advisor business.
Expense: No matter what any RIA start-up consultant or service may tell you, running a well-resourced and compliant RIA isn’t cheap. It should cost around 10%-15% of your gross revenue. So, what you’re really paying should be measured against this real-world cost, not a pie-in-the-sky promise of 3%-5%.
Fit and Culture: Cultural alignment happens at two critical levels: executive and peer. The leadership team should be accessible and trustworthy, sharing your values and vision. Equally important, your peer advisors should have similar business models and client service philosophies. Ensuring the firms’ and other advisors’ focus aligns with your own is also important. However, previous experiences with wirehouses or IBDs should not drive this decision alone. Many examples of firms with excellent culture and advisor satisfaction exist.
When I launched my firm, I did so because there were no other options for a practice of our size and scale. It wasn’t a free lunch, and we had to work hard at building the RIA that ultimately existed to enable us to service our clients the way we wanted. In hindsight, the hard work and sacrifices we had to make are ultimately what led us to create NewEdge Advisors for other larger, more complex practices. My most proud achievement is serving other high-performing advisors and helping them expand upon their success.
A firm that prioritizes its advisors’ needs will help them deliver better client experiences. When advisors can dedicate more time to clients, everyone wins. It results in higher satisfaction and great retention of advisors and clients. This is critical because, in the end, our clients expect their wealth management professionals to deliver something special. Keep grinding away at what made you successful in the first place. Hard work will always be a requirement. Finding a way that keeps you focused on what your clients want and not distracted by what it takes to deliver it is the recipe for success.
Alex Goss is the co-founder and co-CEO, Managing Partner of NewEdge Advisors. Prior to serving as CEO of NewEdge Advisors, he built Goss Advisors into an $8 billion RIA. Goss Advisors was subsequently acquired by NewEdge Capital Group and rebranded as NewEdge Advisors.