Securities compliance, staffing, payroll and other management issues can all cause headaches for financial advisors whether they are independent or working in a bank or credit union, according to Gary Campbell, president of Financial Advocates, Inc. in Olympia, WA.
A licensed broker himself, Campbell’s firm provides a wide variety of support services to LPL Financial-affiliated financial advisors in the Pacific Northwest.
“Our primary job is serving advisors,” he said. “Our staff and our services and our processes are all about supporting an advisor’s business, no matter what model of practice they have.
Financial Advocates, with over $2 billion in assets under management and more than $20 million in annual revenues, is what LPL calls a “Super-OSJ”, the title for its largest independent branch offices, which provide compliance supervision for other advisors. LPL Financial is an independent broker-dealer that serves more than 12,000 financial advisors.
Financial Advocates takes that model one step further, offering a fleet of other services to the advisors it works with.
A total of 102 advisors are affiliated with Financial Advocates, with about 40% of them working out of banks and credit unions. These advisors, Campbell said, are people who enjoy the
client- facing work but realize they are not as efficient when they are trying to do all the back-office tasks as well.
For many financial advisors, Campbell says, some of the biggest problems come when dealing with the management side of their business, such as accounting, payroll, and human resources. Firms that contract with Financial Advocates can literally be placed on their payroll so they can get a W-2 just like at a larger firm. Or they can have their administrative support staff placed on the payroll of Financial Advocates, which can act as the human resources department. In addition, the firm can handle accounting, training, compliance and other issues.
Even as firms grow, Campbell pointed out, it can be difficult to hire all the different employees needed to handle these tasks.
Financial Advocates has a wide range of people on staff, including a CPA, financial advisors, and other specialists. In fact, “one of our longest tenured principals ran a trust company,” Campbell said. “There’s a lot of wisdom in the tree.”
The firm can also provide additional products, and program management, to advisors who need that kind of support.
One of the most important services Financial Advocates provides, Campbell said, is help with regulatory compliance. “We have our own SEC compliant secure Web-based environment,” he said, that advisors can use to keep all their required documents.
“It really helps them to just be efficient with their time and space, and be efficient in managing compliance,” he said.
About two-thirds of the advisors that come to Financial Advocates had been used to having someone else manage their compliance, such as at a larger firm. The other third had been managing the compliance themselves but “were just getting bogged down,” Campbell said.
Compliance is a huge issue for may financial advisors, Campbell said. “In some respects there’s a bit of a race to see who can impose more compliance on us. It’s getting more and more complex.”
Campbell said that when he started at the firm in 1996 he never envisioned the complexity of the compliance regulations there are today. Keeping up with all the paperwork is something that Financial Advocates can help with, he said, because they have a formalized process, and experts on staff.
Another benefit to the advisors Financial Advocates work with is the “the synergies that come from being in a large group.”
Campbell said one of their slogans is “independent but not alone,”
because the firm holds meetings that brings advisors together. For advisors who have struck out on their own after working for a larger firm the opportunity to network or share ideas can be very important.
Some advisors work in the Financial Advocates offices, while others are spread throughout the Pacific Northwest, but “it’s really a virtual environment” for all of them, he said.
When Financial Advocate works with a bank or credit union-based financial advisor “we simply tailor the type of services that we provide to the bank’s preferences,” he said. Some of the larger institutions they work with only want to limited help with regulatory compliance. Other, smaller banks and credit unions come to Financial Advisors for assistance with many broader aspects of program management.
Campbell said that when he talks to advisors he always stresses “the fact that they have choices.” There are many different ways that an advisor can run his or her business, and they should take time to evaluate all those options, he said.