Maybe having a national RIA brand isnt such a good idea after all.
Thats according to Rudy Adolf, founder and chief executive of Focus Financial Partners, the largest consolidator of independent advisory firms in the U.S. with approximately $65 billion in assets and 27 firms around the country in its stable.
For most firms, aspiring to have a national brand is foolish, says Adolf. To have a national brand, you have to have a client experience that can be duplicated in every location, like Starbucks. No independent advisory firm has the ability to deliver this kind of promise.
Even more important, advisory firms shouldnt aspire to offer a cookie-cutter experience, Adolf told Financial Planning.
What makes this industry so successful is that its so client-focused, Adolf notes. The magic is what happens between an advisor and a client, which is the ultimate extension of a personalized experience. I doubt that having such an individual experience fit into a brand standard is such a good idea. Its not in the interest of the client or the advisor.
Nor can independent advisors afford the kind of marketing budgets a national brand would require, Adolf points out.
A national brands marketing budget would cost hundreds of millions of dollars, Adolf says. Those kinds of budgets are just not available to independents. Their dollars are better spent on supporting advisors with the best possible tools to help them do their job.
To be sure, Focus plans to keep expanding its national footprint while keeping the local identity of the firms it acquires.
Well have a Focus brand to the extent that its like a Good Housekeeping Seal of Approval, Adolf says, but the local firm has to continue to be a unique experience for the client. The advisors in those firms know more about what their clients need and expect than I ever will.
Succession Planning Program Set for Fall
In addition, Focus will officially launch its succession planning program for advisors this fall, Adolf says.
The program, slated to be called Succession Solution, will be open to any qualified RIA, who will be offered insurance type planning, according to Adolf.
Interested RIAs would partner with a like-minded Focus firm, who would begin to manage the business when needed, according to a press release describing the program last November. The succession program was soft-launched earlier this year and has a number of firms under contract, Adolf says. Details of the program will be made public when it is officially unveiled in the next few months.
Adolf calls the succession crisis the only real danger in an otherwise highly successful and thriving industry.
So many firms are built up without a succession plan, and the industry is struggling with that, Adolf notes. Its also part of being a fiduciary. Who will take over in case something happens? A fiduciary cant say they dont know, nor can they have a vague answer to this question. Regulators are also beginning to ask this question, and they should."
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