Since I first became an independent financial advisor, I’ve believed that it's not just the best business model in wealth management but a movement driven by the entrepreneurial spirit.
Registered investment advisors are businesses built by advisors brave enough to tie their success to their ability to generate wealth for clients.
However, I’m worried that many in our industry may be getting stagnant. According to Chip Roame’s keynote speech at Tiburon, 93% of RIAs didn’t grow at all last year outside of market returns. In 2022, the fastest-growing model was the wirehouses. In 2023, the fastest-growing model was the discount brokerages. RIAs came in third place both years.1
We need to reignite that entrepreneurial spirit, support the top earners who built the RIA industry to where it is today and create an environment that trains a new generation of rainmakers.
Over 15 years ago, I started researching and studying the phenomenon of advisors going independent and seeing their growth stagnate. They had increased their compensation dramatically by going independent and started to act as more as business operators than rainmakers looking to keep growing.
What is it that makes a rainmaker? What separates the best in business from the rest and what does it take to empower them?
There is a widely held belief that greatness in business, like greatness in any endeavor, is something natural. We know that successful people work hard, but the best of the best are born a bit different.
But research shows that isn’t true. In his latest book, “Hidden Potential,” social psychologist examines the science of greatness, the roots of exceptional talents across various fields. In one study of 120 award-winning artists, athletes, and scientists, only a few of them were ever considered child prodigies. Most of them never even stood out as particularly remarkable in their younger days. For example, among the world’s best tennis players, most lost in the early rounds of competitions when they were young and took years to emerge as top players.2
While the top performers weren’t known for their early aptitude, most of them had two things in common. First, they displayed unusual motivation to improve. Second, they had someone – whether it was a coach, a teacher or a mentor – who made learning fun.
Reading Grant’s book analyzing the science of greatness made me think about my father, who played football under Bear Bryant, the hall-of-fame coach who led the University of Alabama for 25 years, won six national championships and 13 conference championships, and set a record for the most wins of any head coach in collegiate football history.
Each season began at an old army base, where young men would show up at some barracks in the middle of nowhere, miles from any town. It didn’t matter if they were four-star high school athletes or walk-ons – everyone showed up to those barracks and did all-day workouts in the Alabama summer heat if they wanted to make the team.
My father would wake up in the morning and notice that some of the bunks around him were empty. Guys would get up in the middle of the night, pack their bags and make the long walk back to town just to get out of there. Those who survived made the team.
Byrant understood there was no silver bullet or easy answer for building a consistently dominant team. It wasn’t about recruiting the most naturally gifted athletes; it was about finding those with the motivation to work hard and matching those people with a coach who could mold that effort into success.
Because rainmakers are not born; they are made.
I believe this is how we create an ecosystem that supports our existing rainmakers and trains a new generation to overcome the RIA’s growth problem. I believe there will always be an opportunity to succeed in this space, but we have to get back to the basics of building a business: shaking hands, making phone calls, attending industry events like this, marketing and getting into professional circles to build a network. It will also take coaching for rookies and veterans because the best can never stop honing their skills.
TradePMR is invested in helping RIAs create that ecosystem. Our company’s guiding star is helping RIAs build a culture that empowers them to perform at their best, to build a culture that supports and nurtures their rainmakers.
The average client is getting wealthier, and they’re demanding more and more services from advisors. In return, advisors expect more from their custodians.
I don’t believe retail discount brokers are the best solution to support high-net-worth clients in the long term. I’m positioning TradePMR to fill that gap and be that high-end custodial services provider.
Now is a pivotal time in our industry. The opportunity has never been greater to make the RIA industry into what we all believe it can be, but success is not easy and never has been. It is going to take effort from all of us. We want to ensure that independent advisors thrive, compete and grow in the marketplace.
As I love to say – if you’re not growing, you’re dying.