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Advizent Closes, Doomed by Lack of Funding

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Advizent, the would-be marketing and branding consortium for independent advisors, closed down Thursday, one year after its ambitious launch by industry heavyweights Steve Lockshin and Charles Goldman.

Lack of funding doomed the enterprise, Lockshin and Goldman said in an email to advisors, asset managers and custodians, obtained by Financial Planning.

“We ultimately could not reach the aggressive funding goals we deemed necessary to effectively reach a large number of investors and launch a meaningful brand,” Lockshin and Goldman said. “Therefore, despite our deep and continued commitment to the cause, after much consideration, we have concluded that we simply are not comfortable raising investor dollars or continuing to fund the effort personally without more significant advisor and industry support.”


Advizent was meant to be a for-profit marketing cooperative that would generate a national branding and awareness campaign for independent advisors, serve as a referral service to match consumers and advisors, and create a fiduciary standard for members.

More than 140 advisory firms, with combined client assets of more than $150 billion, and a “small number” of asset managers and custodians had committed to becoming Advizent members, according to Lockshin and Goldman.

Lockshin, Barron’s top-ranked independent advisor in 2012 and the chairman of Convergent Wealth Advisors, said last summer that he and Goldman -- who had formerly run the custody units at both Charles Schwab Corp. and Fidelity -- had put more than $1 million of their own money into Advizent.

They had hoped to raise $30 million to $50 million for this year's operating budget, and eventually exceed $100 million. In addition to their own money, Lockshin and Goldman were asking advisory firms to pay a membership fee of between $25,000 and $100,000, based on size. They also reportedly were asking custodians for one basis point on Advizent-member assets, and two to five basis points on assets from money manager members, which would have meant potentially millions of dollars in fees.

But the companies balked at paying up, and Lockshin and Goldman decided they simply didn’t have the support they needed to go forward.


Thursday's announcement revealed the collapse of the once-promising venture, which attracted considerable attention (and some big names) with its launch last year. In August, Advizent had made a big splash announcing that the legendary John Bogle, founder of the Vanguard Group, would serve as senior chairman of Advizent’s independent board of standards. But Bogle resigned by the end of the year, perhaps the first indication that the venture was not gaining traction.

Advisors and industry observers expressed sympathy with Advizent’s goals, but said they were not surprised by its failure.

“I give Goldman and Lockshin huge credit for attempting such an ambitious undertaking, but this outcome doesn’t surprise me at all,” said Dan Inveen, principal and director of research FAInsight, an industry consulting firm, in an email. “For the fees discussed, it was hard for me to imagine a sufficient mass of firms being interested in this exchange. There are plenty of organizations today that will espouse the benefits of independence for you at little or no cost, including TD Ameritrade’s advocacy program, Schwab’s ‘RIA Stands For You’ campaign, and efforts by trade organizations such as NAPFA and the Financial Planning Association.”

“It was a tough mountain to climb,” said industry consultant Chip Roame, managing partner of Tiburon Strategic Advisors. “If anyone could climb it, Charles and Steve were the ones. But the model required custodians to pitch in, which is tough to [carry off].

"And RIAs are not like brokers or insurance agents who almost naturally want to group together," Roame added. Most RIAs are independent because they value the attributes of independence.”

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