As the advisory landscape continues to evolve, it's often hard for advisors and brokers to navigate the changes — and some widely held myths don't help, according to executives from Advisor Group, Cetera Financial Group and BNY Mellon's Pershing who spoke at the virtual FSI OneVoice conference on Tuesday.
Here are two industry myths that speakers busted during a panel session:
1. There's a "mass exodus" to the RIA space from the broker-dealer channel.
Moderator Chris Roberts, senior vice president of sales support at Kestra subsidiary Grove Point Financial, pointed to data showing 52% of advisors in the independent broker-dealer (IBD) channel are considering a move to the RIA space.
But Shannon Larson, senior vice president of platform management and product development at Advisor Group, stressed there's a big difference between "wish to" and actually moving to the RIA channel.
A lot of advisors are concerned about becoming RIAs for reasons that include the "compliance responsibility" they would have to take on and the "greater liability and supervision responsibilities and oversight responsibilities," she said.
Although "you hear a ton about the RIA space" providing more money, flexibility and autonomy, Tim Stinson, head of wealth management and recruiting sales at Cetera Financial Group, said: "You have to really have an understanding of what that means. Are you prepared to do it? RIAs will tell you how much a pencil costs inside of their" profit and loss (P&L) statement.
Stinson pushed back on claims the IBD space is "going extinct," saying: "If you look inside of the IBD space … we just don't have a preponderance of advisors that actually want to run a P&L to that level and to that degree and invest in technology and build brand and autonomy and figure out tech stacks."
The idea that "there is this mass exodus to RIAs has some hyperbole around it," Stinson said. "None of us want to be Blockbuster, so we can't ignore a real-world trend that is out there" about a growing number of advisors and brokers moving to the RIA channel, he said. But he was quick to add: "Are we going extinct? No."
Despite challenges the IBD channel is facing, "retention is still 90-plus percent across the board for the IBD space," Stinson noted. IBDs, however, do "have to create new affiliation models and embrace change," he warned.
