Marty Bicknell and Steve Lockshin, two of the financial advisory industry's most prominent executives, have ended their business partnership in two high-profile ventures, the men said.
Bicknell, the chief executive of Mariner Holdings, one of the industry's largest RIA holding companies with over $34 billion in assets under management, is no longer involved in B+, the company that has the distribution rights for Betterment Institutional.
Lockshin, the founder and former chief executive of Convergent Wealth Advisors who now heads AdvicePeriod, a Los Angeles-based wealth management firm targeting ultrahigh net worth clients, has withdrawn from FirstPoint Financial, Bicknell's client segmentation RIA that targets emerging affluent clients with investable assets between $200,000 and $1 million.
Both men stress that the parting of ways in the ventures — formalized at the end of November — was amicable, and point out that they remain business partners in other ventures, including Quovo, a data aggregator and Advizr, which makes financial planning software.
"There are no Marty and Steve issues," says Bicknell, who also heads Montage Investments and Mariner Wealth Advisors, whose partner firms control over $14 billion in AUM. "We're very good friends and we continue to work together on other projects."
Bicknell is "one of the very few people in my life [with whom] all I need is a handshake agreement," Lockshin says. "Everything was done in a very gentlemanly way."
Bicknell says he wants to focus on growing FirstPoint in 2016, while Lockshin is aiming to expand B+ and also start a new B-to-B venture selling AdvicePeriod's planning techniques to other advisors.
By dissolving the partnerships, both men realized they could more effectively leverage their individual skills to better take advantage of the two fast-growing business segments.
THE B+ PLAYBOOK
B+, launched in 2014, has received attention because of the connection with Betterment, the country's leading independent robo advisor. Lockshin was an early - and prominent - investor in Betterment.
OpenAdvisor, Lockshin's holding company with his AdvicePeriod partners, controls B+ and now owns 100% of the firm. The company distributes Betterment Institutional's digital platform to RIAs and provides sales, service and practice management help. A basis point fee starting at 25 basis points, which goes down as platform assets increase, is charged to the end client and shared by B+ and Betterment.
Over 200 advisory firms are on the Betterment Institutional platform, according to Tom Kimberly, general manager of the division. Betterment doesn't break out assets between retail and institutional, but the robo now has over $3 billion in AUM, Kimberly says.
Assets on the insitutional platform are growing at around 100% per quarter, according to Lockshin, a pace he hopes to match or surpass in 2016.
DIGITAL WILD WEST
Betterment's entry into the 401(k) business in 2016 augers well for the future, he says. As for the termination of the automated digital advisor's partnership with Fidelity, Lockshin says he has no regrets.
The partnership ran its course, but "served both parties well," he maintains. "Fidelity got to see how the digital market worked and Betterment got great brand recognition and credibility."
Lockshin, author of "Get Wise to Your Advisor," a primer on the financial advisory business, is convinced that the industry is still in its Wild West phase when it comes to digital innovation and will continue to be impacted — for the better — by "lots of emerging technology."
$7 TRILLION 'EMERGING AFFLUENT' MARKET?
One of the reasons Bicknell pulled out of B+ is to leverage his extensive and successful retail background by focusing on building an emerging affluent market segment estimated by Fidelity to be worth over $7 trillion.
And while he intends to use “smart technology" from firms such as Jemstep, Advizr, Quovo and eMoney,Bicknell sees a “non-robo" solution emphasizing the "human touch" as a differentiator for FirstPoint's client segmentation strategy.
"I think this is, always has been, and will continue to be, a relationship business," Bicknell says.
In fact, the Clearing and Custody unit of Fidelity Institutional Wealth Services works with FirstPoint as asegmentation specialist for its RIA clients.
FirstPoint, which is fully owned by Mariner Holdings, partners with RIAs who have prospects, clients or children of clients who don't have enough investable assets to meet the firm's minimum threshold.
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The RIA refers the client to FirstPoint and in turn receives an annual revenue stream based on the clients' assets at FirstPoint. Firms who are Fidelity clients get 35 basis points; firms who are not get 25 basis points. The client signs an investment agreement with FirstPoint, but can return to the referring RIA later if they choose to.
BICKNELL'S CLIENT SEGMENTATION BET
Bicknell is betting FirstPoint can serve smaller balance clients more efficiently and profitably while partnering with other RIAs who not only get a piece of the business, but also loyalty form their existing client base, who tend to refer a child or spouse.
While digital technology is critical for scale, Bicknell says FirstPoint is also emphasizing personalized human advice, hiring new advisors and enhancing the RIA's "service commitment" to advisors and their clients.
"I think technology and the digital revolution will only level the playing field and make the relationships we have with our clients that much more important," Bicknell says.
Indeed, putting Mariner's considerable resources in an emerging mass affluent retail client will be a top priority in 2016, Bicknell has made clear.
Lockshin, by contrast, will follow a B-to-B path, selling to advisors interested in his wealth management planning techniques and Betterment's robo technology.
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