The National Report on FA Compensation.

Everyone is replaceable. Few Advisors, however, are aware of exactly what it would cost their firm to replace them. Here’s a hint: it’s stupid money.

An Advisor generating $3M in annual revenue is worth $12M, likely more. Most Advisors focus on this multiple, when they should be focusing on the full picture.

Replacing Advisors costs a firm upwards of 6x.

An acquiring firm must back the $12M hire with earmarked funds for additional support staff, office space, compliance, and more. On the open market Advisors can command up to 4x. Replacing Advisors costs a firm upwards of 6x. This raises the true cost of replacing our hypothetical $3M producer to $18M, maybe more. When client attrition and impact to Goodwill are factored, the price becomes catastrophic.

The Delta between an Advisor’s production and the cost to replace them is referred to as ‘Arbitrage’, and it can be significant. In the right hands, this knowledge is power.

Continue reading: How to Land Next-Gen Clients →

For your entire career, the Brand did the heavy lifting. Back when it was you, a desk, and a phone. In the beginning, you relied on the Brand for your credibility, almost through osmosis. But that was then, and this is now.

Next-Gen prospects grew up in the looming shadow of the 2008 Financial Crisis. They watched elite Brands collapse, seemingly overnight. Lehman Bros was an institution with a storied history; that history was worth about as much as a Subprime Mortgage. They were one bank run away from insolvency.

Next-Gen prospects simply do not care about the Brand.

Ask an under-40 client why they keep their money where they do and you’ll get an answer about fees, technology, or even what a friend or family member recommended. You will not get an answer about a marble lobby or an impressive corner office on the 32nd floor.

Next-Gen prospects simply do not care about the Brand. To close, a successful Advisor must offer the prospect an experience that appeals to their desires: Custody, Clearing, and a strong Advisor relationship.

The good news about ditching the Brand is that going Independent is easier than ever before. There are now off-the-shelf tools available that allow Advisors to fire their Brand and build a strong enterprise — without having to design a back office from scratch.

Fidelity and Schwab both run mature RIA custody platforms with excellent trading, reporting, and client-facing technology that rival anything on the Street. Both have spent the better part of a decade training their teams to better support Breakaway Brokers.

Pershing, through BNY Mellon, offers a similar platform targeted at those Advisors who prefer the security of a broader institutional balance sheet. When you layer any of these platforms onto a modern Advisory team, you can offer a client (or a Next-Gen prospect) an experience that is virtually indistinguishable from a Major. That is, of course, minus the payout haircut and the Brand tax the Advisor was charging.

Next-Gen prospects have shifted their trust to the Custodian’s balance sheet and to the Advisor’s own name. Advisors who act first on this paradigm shift are not taking a risk; they are setting themselves up for continued success. Fire your firm. You will thank us later.

Wealth management will always be a belly-to-belly business. Advisors still win clients through trust, referrals, timing, and relationships. AI does not change that. What it does change is how efficiently Advisors prospect.

Top wealth management teams are beginning to use enterprise AI tools to strengthen the prospecting process. Aidentified is an AI-powered platform that monitors consumer and professional data to track relationships and map out warm introduction paths to high-value prospects.

Most Advisors do not have a shortage of leads. They have a shortage of time.

A team may have as many as 5,000 business owners, executives, and founders sitting in a CRM. AI can help narrow that list to the 50 worth calling.

Another tool, FINNY, can monitor consumer and professional profiles 24-7. The software researches prospects, monitors major life events, and works to create outreach content. FINNY then brings leads to the surface when they are most likely to convert from a prospect to a client.

CRM prioritization is yet another opportunity where AI can help an Advisor grow. Catchlight scores existing leads by tracking income, investable assets, interests, career history, and likely life events. The average Advisor spends upwards of six hours a week researching leads; AI can do it in three.

Closing clients remains an Advisor’s responsibility; AI is simply streamlining the process. Your next client may still come as a referral from your golf buddy. The software just told you who to call first.