Page 18 - Investment Advisor September 2022

RIA LESSONS & LEADERS

By Jeff Berman

Sonnen’s 10 Wealth Management Tips

Since his start at Merrill, PFI Advisors CEO Matt Sonnen has learned that
not all is what it seems in the RIA space.

ince entering the wealth manage-
ment sector in July 1997, when
She joined Merrill Lynch as a wire
operator, Matt Sonnen has learned many
lessons, he says. In a recent blog post
marking his 25th anniversary in the
industry, Sonnen reflected back on 25
of those lessons. In an interview with
Investment Advisor, he went into more
detail on some of them.
After leaving Merrill Lynch, he helped
launch Luminous Capital and, when
Luminous was sold to First Republic in
early 2013, he joined Focus Financial
Partners. Then, in 2015, he started PFI
Advisors — which offers RIAs specialized
business and other services — with his “Sure, they are giving up some level of decisions that are not always in the
wife and business partner, Reese Sonnen. freedom,” he said, “but they trade a por- client’s best interest.”
“Although I have every intention of tion of this total freedom in exchange
sticking around for another 25 years in for having the administration of the 4. RIA owners are often fantastic
this amazing industry, I thought now business taken care of for them by an financial advisors who struggle
would be a good time to take stock and existing firm or platform.” with the nuances of being
list some of the lessons I’ve learned dur- business owners.
ing this wild ride,” the veteran industry 2. Firms that prioritize their “RIA owners typically get into this busi-
executive said in the post. employees over their clients tend to ness to support clients in their financial
Here are 10 lessons from Matt be more successful than firms that goals, not necessarily to be business oper-
Sonnen’s 25 years in the industry. prioritize clients over employees. ators,” according to Sonnen. “Michael
“Our industry’s mantra of ‘Clients Kitces famously refers to them as
1. Advisors crave independence, but First’ can sometimes overshadow the ‘Accidental Business Owners.’”
not entrepreneurship. importance of our employees,” Sonnen
Although the trend of advisors moving explained. “If employees are taken care 5. Firms with a documented ideal
to independence is “very real,” Matt of well, you can be assured that clients client persona grow faster than
Sonnen said, “far fewer advisors are will be taken care of well, and that leads firms that don’t.
looking to start their own RIAs than the to more referrals.” The industry veteran pointed to a
press would have you believe.” Charles Schwab benchmarking study
“Most advisors in the employee/ 3. A bank that says ‘We’re an RIA’ finding these firms attracted 42%
captive channel just want to focus on is still a bank at heart. more new clients and 45% more new
their clients and prospective clients, “For banks, profit margins on check- client assets than those firms that
and the thought of dealing with cyber- ing accounts and mortgage loans are didn’t: “Offering a specialized service
security, business insurance, human oftentimes higher than the AUM fee to a segment of the population is bet-
resources, and compliance makes their placed on a client’s investment portfo- ter than blandly stating, ‘We work with
head spin,” he told ThinkAdvisor in a lio,” he said. “From experience, I can clients with $3 million or more of Adobe Stock
recent interview. say that this conflict leads to biased investable assets.’”

14 INVESTMENT ADVISOR SEPTEMBER 2022 | ThinkAdvisor.com