In case you didn’t make it to Salt Lake City last month, I wanted to share a recap of Barron’s Advisor Independent Summit.
First, I have to confess something. Standing in that hall in Utah was like seeing much of my professional philosophy validated before my eyes. I’ve spent years and years imploring advisory firms to be hyper-focused on organic growth. Now, finally, organic growth is the number one topic in the industry.
Now, on to the recap:
Mark Randolph, co-founder of Netflix, gave the keynote. He talked about the life of an idea. No one starts out knowing what they’re doing. What set Mark apart was generating a lot of ideas and being willing to try them out—testing, failing, learning, failing again. One remark really struck me. If you are unwilling to disrupt your business, someone else will be happy to do it for you. Blockbuster passed up the chance to buy Netflix. A few years later, Netflix put Blockbuster out of business. Mark’s message of constant experimentation and self-disruption was an amazing kick-off to a conversation about organic growth.
Next came my own presentation about an “inside-out” marketing framework to drive organic growth. You can read about it in my latest article.
Matt Hogan, Chief Investment Officer at Bitwise Asset Management, made a compelling case about the untapped potential of Bitcoin ETFs. The coolest thing was the way he explained Bitcoin in an approachable, engaging way to a room of 300 hungry people before lunch. He described it as a financial technology that brings money into the modern age, letting you store and send wealth without relying on a bank. Check out his conference takeaways on X. Bottom line: RIAs are enthusiastic about Bitcoin, but few are allocating to it now.
The M&A panel proclaimed that the glory days of arbitrage are gone, and firms need to find other ways to drive value. Some aggregators are turning into integrators. Brent Brodeski talked about Savant Capital Management’s transition from a one-stop-shop with a captive law firm, a 100-person CPA firm, and trust offering, to a platform with a fully integrated advisor and client experience. The panel was skeptical about growth equity achieving the same economies of scale as private equity, since a minority investor in individual firms can’t integrate a single model and experience across multiple firms the way a full owner can. (That’s their take. I personally see great opportunity in the growth equity model.)
Mark Hurley, CEO & Founder, Digital Privacy & Protection, gave an amazing presentation on organic growth that perfectly complemented my own. He points out the industry has been coasting on asset appreciation instead of investing into the business. Now market momentum isn’t enough anymore, and organic growth is back in focus.
The problem is, acquisition costs are only headed upwards from here. Successful firms realize they’re in a limited-time land grab, and need to capture as many new clients as quickly as they can. But most firms just aren’t prepared to act. Their brands have been neglected to the point of irrelevance until now, so they can’t drive new business to the door.
Mark thinks a few large advisories may blow their bank accounts in a face-to-face brand war with Schwab and Fidelity. But Schwab alone spends $465 million a year on marketing, generating so many clients it can spare 14,000 to farm out to third parties.
More astute advisory firms will build potent, cost-effective brands around problem solving for a specific target audience. Bigger firms who want to succeed will rely on a collection of sub-brands wrapped inside a larger one. Mark cautions that organic growth requires long term focus and patience, so if you don’t start right now, don’t expect to win at catch up.
Mark also predicted PE firms are going to be disintermediated by their investors, which I thought an interesting take. He expects a lot of institutional investors, sovereign wealth funds, and family offices that invest in private equity are going to start doing deals directly in the wealth management space.
Mark also sat on a cybersecurity panel, where shared a few choice warnings about digital threats. He said RIAs who haven’t closely read their custodial agreements think their custodians will save them in a cyberattack—but they won’t. Losses will lie with customers.
Rohit Mahna, Head of Client Growth at Fidelity Institutional Wealth Management Services, talked about how rising valuations are putting firms out of reach for successor generations. It’s often cheaper for advisors to monetize new businesses than invest in an existing one, making the industry’s succession problem even harder. We are in a hyper-growth sub-industry in financial services, Rohit says, which is what really puts pressure on talent.
On the other hand, that growth is concentrated. Rohit shared that seventy percent of firms who custody with Fidelity did not grow at all from 2012 to 2022. The best firms are the ones investing in great organic growth strategies that nail their mission and vision (his viewpoint honestly could not be more New Skool). Niche marketing can drive massive growth, but it’s currently way more episodic than it should be.
Ben Harrison, Managing Director, Head of Wealth Solutions, BNY Mellon | Pershing pointed out that convergence has resulted in less differentiation and a sea of sameness across the industry. Firms need to focus on messaging first, and fast.
Steve Lockshin, Founder of Vanilla and of Advice Period, also spoke about the sea of sameness. He’s also all-in on AI, using it as a co-pilot across his organizations, from marketing and education to processes and efficiencies.
Barry Ritholtz, Founder, Chairman and CIO, Ritholtz Wealth Management LLC, urged the industry to focus on training the next generation of CFPs and CFAs. Yes, it’s expensive and hard. But there’s a huge demand for financial advice, and the public recognizes that advisors create enormous value.
So that was Barron’s Advisor Independent Summit. As you see, everyone is now saying the same thing. We can’t rely on bull markets to prop up growth or mask a lack of differentiation. Organic growth is all we’ve got, and we’ve got to make it work. And with client acquisition getting more expensive by the day, there’s only a very narrow window of opportunity to grab market share. Speakers agreed, it’s time to get your vision clear, plant your stake in the ground, and focus.