Mergers and acquisition activity is flourishing in the wealth management space. But that portrait isn't completely rosy, as Katrina Soelter, co-founder and co-CEO of Avise Financial, argues in an interview with ThinkAdvisor.
"There's a huge M&A structure that's taking over the industry. A lot of those older advisors are getting a nice payout from the aggregators," Soelter maintains. "But the younger advisors aren't necessarily getting complete ownership in the way the original owners had it."
Avise, mostly virtual, is the industry's first RIA cooperative platform, according to Soelter, who founded the firm with fellow CFP Leighann Miko. Launched in January, it provides back-end services in a nontraditional way, as Soelter details in the interview.
Each member is a part-owner, and the net profits are distributed to all members. At the same time, each advisor owns an individual practice and set of clients.
The two Avise business partners also work together at Equalis, a practice founded by Portland, Oregon-based Miko, and focused on the LGBTQ community. Soelter, vice president of financial planning, more broadly targets female breadwinners and their families.
In the interview with Soelter, who is based in Los Angeles, she notes that the Avise collective's shared approach works to represent the "huge shift" in "what financial power in America looks like."
Here are highlights of our conversation:
THINKADVISOR: Succession is a major issue in the financial advice industry. Is Avise addressing it?
KATRINA SOELTER: We know that a third or more of advisors plan to sell their practice in the next decade. A lot are trying to figure out what their succession plan looks like, and a lot of younger advisors are interested in being successors.
Is there a problem with that?
There's a huge M&A structure that's taking over the industry. A lot of those older advisors are getting a nice payout from the aggregators, but the younger advisors are not necessarily getting complete ownership in the way that the original owner had it.
So there is some frustration among the young advisors and the older advisor side too in that they want their clients taken care of, and the younger advisors want to do right by those clients too.
So there is tension.
How is Avise helping to alleviate it?
Our hope is that we can help negotiate some of those deals, and help both the older advisors find the right successor and [assist] the younger ones with back-end support.
We won't provide any of the capital, but we would be negotiating between the two parties.
Please describe how Avise, which is a cooperative platform, essentially works.
Every member is a part-owner in the firm. The net profits of the company are distributed back to the members.
Is the co-op structure unique to the industry?
There are some companies that are co-op-like, but to our knowledge, none that are legally a cooperative and doing it as a platform structure, as ours is.
What do you provide to the advisors?
Back-end services: business administration, billing, compliance, custodial relationships.
The advisors choose how to structure their business and can have their own branding or use ours. They can have their own website.
Their business is still their own — they own their clients.
Do you provide client referrals?
