Happy New Year! At this time every year, I look back at things I've accomplished in the year just ended, and ahead to things I expect to happen—and no, my market predictions are never correct.

Looking back, I've just completed my Success Factors report, which outlines all the great practice management innovations and ideas that my Inside Information service has published over the past few years (available on my website), and a practice management report for Inside Information readers with the generous help of Mark Tibergien, Rebecca Pomering, Diane MacPhee and Stephanie Bogan—the wisest practice management voices I know, all helping advisors position their practices to survive and even prosper despite declines of up to 30% in quarterly AUM revenues.

Last year, I was also privileged to speak to planning audiences around the country, and found myself offering fundamental principles of success, prosperity and energizing client service in a motivational voice that I never quite expected to come from my own lips. But the most fun I had as a speaker was actually in several co-presentations with securities attorney Tom Giachetti. We role-played a court/arbitration situation in which I (the advisor) had done a lot of things most advisors do, and was discovering that they could come back to haunt me if a disgruntled client hired an attorney.

The whole presentation was revealing, entertaining (Giachetti has comic flair and I found that I can be a pretty good straight man) and a little unsettling as we recognized how normal practices can be twisted and turned in the hands of a smart plaintiff's attorney. For those of you looking for a compliance session at your next conference—one that the audience will not sleep through—this could be the ticket.

Great Expectations

Looking forward, I am expecting something dramatic in the independent RIA world: an influx of the smartest, most sophisticated wirehouse brokers. Many of them have been practicing as fiduciary RIAs in a semi-hostile environment and they will enter our world like refugees fleeing a war zone.

Once they've settled on our shores, they'll think they've died and gone to heaven. The independent world really does function without in-house products and house investment accounts! Not only that, it generally has equally responsive trading platforms and better software tools than they're used to.

They will also be able to keep a tad bit more than their former payout, which ran to 40% of the revenues they generated at best (no more having to fund those obscene executive bonuses back at headquarters). They will also enjoy better client relationships, as nobody will be harassing them about wasting time sitting and talking with the people they serve.

The area that wirehouse refugees might find challenging is in adapting to the RIA culture. In the RIA world, a significant (fee-compensated) contingent thinks "asset gathering," "production" and "gross dealer concessions" are dirty words, and those advisors who do take commissions are increasingly living off upfront planning fees and asset management revenues. If brokers start attending NAPFA conferences, they will encounter a consumerist attitude that may seem to them anti-business and self-sacrificial. If they wander into the FPA Retreat, they are likely to hear about the soft side of client services and life planning, and wonder if they haven't, by some bizarre mistake, stumbled into a psychologists' convention.

What Brokers Add

What they will bring to the table, though, is a business sense that the planning profession, in general, is going to have to give far more attention to in this lower-AUM environment. The new members of our community will know how to market, will measure and track their revenue growth, and will be somewhat bewildered by advisors who spend so much time working for their clients that they hardly have time to tend to their businesses. Because they know how the wirehouse culture works, they will be the most formidable competitors to the brokerage office down the street; they may even set themselves up as a haven for individual brokers to want to skip out and bring client relationships with them. I don't expect the wirehouse advice model to survive very long in competition with these new members of our fiduciary community.

While RIAs and brokerage refugees adjust to one another, mainstream advisors will be confronting the practice management challenge of on 20% to 30% fewer revenues than last year while, at the same time, tending to needier clients and having more prospective clients knock on their doors looking for help.