5 Things Advisors Don't Understand

September 24, 2019

Diversity Is Still Just Lip Service
Deane Financial Partners
Headquarters: New York, New York
AUM: $1 million, plus subscription plan revenue
Percentage of AUM in ETFs: >90%

Samuel Deane, founder/CEO:

I felt overwhelmed walking into this conference and being one of four black men out of the 600 advisors who are here. It's tough to deal with. There's a lot of pressure.

I don't think it's the industry's fault, per se, but I think it stems from a lack of general knowledge of what we do and who we are. When you think of a financial advisor, you think of somebody who's just selling stock on Wall Street. We do far more than that. So, just being visible and showing other people that we're here and that we deserve to be here.

As a black male, I feel we have the responsibility of pulling our community with us, and I think that's something my community really values, and everybody tries their best to accomplish.


New Tech Won’t Lower Most Advisor Fees

Accuvest Global Advisors
Headquarters: Walnut Creek, California
AUM: $450 million
Percentage of AUM in ETFs: 70%

David Garff, president:

A lot of advisors are getting disintermediated, and they don't even know it. Vanguard offers portfolio construction for nothing. Betterment offers portfolio construction for nothing, and rebalancing and taxes. So what do you really have as an advisor? Behavioral coaching and the client relationship.

So as you turn this into a technology experience and not a human experience, you're enabling the very people who are trying disintermediate you.

If you ask advisors, "How many of you really seriously think a robo is going to take money away from your business?" maybe 15% will say yes. The other 85% will say, "Nah, I'm fine. I might not grow as fast. I'm concerned about it. But …" [shrug] Just look at the fact that advisor fees are still the same, even after this robo “revolution.” If advisors were panicking, they'd be bringing their fees down. That would be the first thing they’d do.

The average advisor is, what, 68, 70 years old? Whether the client stays or not in the next five years is not really relevant to them. They don't really care. If you start losing clients because your fees are too high, then you'll just maintain your margin on a smaller number of clients. I don't think there's a real movement afoot of 70-year-old advisors who are going to say, "Danggunnit, I used to charge 100 basis points; I need to charge 50 now."

Ten years from now, though, the average fee will be lower, and the average age of the advisor will be lower, and that will be the thing that drags fees down.

Contact Lara Crigger at [email protected]

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