As a founder of Advisory Services Network (ASN), Tom Prescott spends much of his working time grappling with the question of how to help financial advisors structure their practices to optimize growth and client service.
Prescott's firm provides outsourced back-office support to financial advisors looking to establish or grow an independent practice. Professionals working with the firm receive tools, technology and relationships meant to help them manage and grow their book of business.
Prescott says his firm's model is unique in that advisors working with ASN retain 100% ownership of their existing and future book of business. ASN merely acts as a service provider partner that helps advisors spend less time on business administration and more time on business development, especially when it comes to asset stewardship and compliance matters.
Speaking in an interview with ThinkAdvisor, Prescott described the competitive landscape facing today's independent financial advisors as both daunting and exciting. Many segments of the advisory industry have enjoyed record growth in the wake of the COVID pandemic, and Prescott points to substantial consolidation across all segments of the financial services and advisory industry.
Client demands are growing, too, and advisors are having to do more than ever to justify their fees in the eyes of clients and prospects. Prescott says there has never been a better time to be an independent advisor, but firms leaders still have to work diligently to keep their organizations on the right track.
THINKADVISOR: When it comes to the typical client of Advisory Services Network, what kind of operational and competitive pressures are they facing in the current environment?
TOM PRESCOTT: It is both an exciting and a challenging time for advisory professionals, and especially for those firms who are in the marketplace looking for a partner like Advisory Services Network. Many advisors out there are enjoying strong growth, and their biggest challenge is maintaining a high level of client service and just managing the operations of a growing practice.
Many advisors, regardless of where they sit today, are thinking about the best place to plant their practice for the long term. The choices facing a registered investment advisor shop or representative with, say, $300 million or less in assets are still somewhat limited. Aside from starting an independent entity or joining an existing RIA, there are the traditional bank, independent broker-dealer and conventional wirehouse channels.
Each option has historical shortcomings that might include poor support services, limited investment options, corporate branding issues, poor regulatory history and, in some cases, variable payouts that create unpredictable income streams for the advisor.
In this environment, many firms find themselves considering sales or acquisitions, but mergers can be messy, requiring complex technology and cultural integration. This takes time and can create service issues for clients, and frankly, smaller RIAs may find themselves overlooked in this rush to expand.
Today's advisory practices have different technology requirements and service expectations. In selecting a platform like ours, advisors are looking to align with a team built to address those needs.
What are some of the most common motivations you hear among financial professionals who want to go independent?
They want greater freedom to serve their clients, and they want more time to devote to building their client relationships as opposed to managing a business.
