New Co-Op Helps Young Advisors Own a Practice

by Jane Wollman RusoffFebruary 05, 2024 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?No. But the goal is that we’ll have a matching aspect to the company for people that are interested in finding a good advisor fit.We’d be able to match them to advisors on the platform. But that’s a longer-term goal.Avise is CFP-focused. Does that mean that every member must have a CFP?Our standard is that we’re fee-only, and each team should have a CFP or someone that’s going to be getting their CFP in short order.What significance does Avise bring to the industry?Diversity. We know diversity matters. There’s a huge shift in what America looks like now and what financial power in America looks like.But diversity in the CFP profession is only very slowly growing. Are you talking about gender, race and age diversity?Yes. But also, how people identify. [For instance], my business partner Leighann’s practice is very much focused on the LGBTQ+ community.What’s challenging to diverse financial advisors in building their business?A lot of advisors who are more diverse tend to be younger and are trying to figure out what it looks like to be in this profession, to build a practice serving a unique market and work with clients that are a best fit for them.What might they have in mind?They may want to do a subscription model, fees, all sorts of different things that may not be as well embraced by some of the bigger firms.How are you helping?We’re providing an opportunity to those diverse advisors to market and brand however they want, while not getting caught up in all [the other] aspects of running a practice. It makes a smoother transition to independence and to unique niche branding or working with a particular client subset that they want.Who actually performs all the back-office operations at Avise?Leighann and I are doing a lot of the day-to-day operations, but we also have several outsourced partners helping to design and structure our offering. We’re planning to hire a director of operations within a year and a half.How else is Avise setting itself apart?We’re going to be running a three- to five-year residency program where advisors in the first year start doing operations; the second year, paraplanning work; and the third, associate planner work.They’ll provide those services to the advisors on the platform at an hourly rate. So the [financial advisors] don’t have to hire in-house staff to perform them.What’s the upshot? It gives the [new financial advisors] a pathway to getting experience and building their careers, and it gives the advisors on the platform the ability to access support services at cost.The original version of this story was published on ThinkAdvisor.