Designed Wealth Management co-founder offers honest insights from his experience of building a business
This article was produced in partnership with Designed Wealth Management.
Reflecting on our past two years, we look back at our experiences in advisor recruitment and business development. In our experience, most advisors don’t leave investment dealers because of a recruitment bonus, or some other opportunity. Most advisors leave dealers because they feel like they have no other choice. They are often left without anyone to turn to, are no longer being supported in their business and they can’t serve their clients in a manner consistent with their values. In this scenario, the advisor is backed into a corner, and that’s where the decision is made. But what is it that finally pushes them into the corner?
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The main reason advisors leave dealers is because of a negative triggering event. The event is not usually company-wide, but rather something that is specific to the advisor. Triggering events include philosophical disputes with branch managers, compliance departments or head office, rejection of an investment product to be added to the dealer’s product shelf, or a client-focused request that doesn’t get addressed. These types of events ultimately lead to negative client experiences, or even worse, clients searching for another advisor. These triggering events create a realization that the advisor’s environment is simply never going to change, and they prepare to make their decision to leave their current dealer.
While we have hit our targets, advisor recruitment was much harder than expected, and the business development process is much longer than expected. Further, the perception around “switching costs” from changing dealers was higher than expected. Unfortunately, quite often, miserable advisors stay with the “devil they know” as some of them put it.
Contrary to most of the mainstream media, most advisors don’t leave dealers because of a financial incentive, or one area alone like lack of service, misalignment with beliefs, product offerings, or technology. While our compensation model is the best in the industry for advisors, it’s generally not the reason advisors join Designed Wealth Management. For an unhappy advisor, money simply isn’t the deciding factor. As we talk with advisors, we are finding a deeper need for true connection on what the advisor and client experience entails. Perhaps in the face of continued virtual relationships with clients, and an ongoing threat of AI and automated investment advice, advisors are seeking something they can truly connect with as they look to the future. When an advisor is backed into a corner, they realize how valuable that connection is.
At Designed Wealth Management, we believe authenticity and transparency is a competitive advantage in an industry where senior management is mostly guarded and secretive. Advisors looking at where to go don’t want to move sideways, or from one back corner to another. They need a home where the experience they have, and the experience they offer to their clients, is based on collaborative and open dialogue. If you ask a question, we will answer it in writing (so long as it’s not bound by a confidentiality agreement).
Given the evolution of the industry, from regulatory amalgamation to the increase in in-house fund pressures, we believe a continued focus on transparency will grow trust. When advisors can be heard, and have somewhere to take their questions and ideas, they can stand on solid ground as they develop their business.
Leveraging transparency is not a unique strategy, although it is rare. In fact, most advisors don’t know what transparency means until they see it. After communicating openly with prospective advisors, it’s clear they want to understand the higher purpose of their dealer (besides making money or selling proprietary products). They want to understand the interface between their actions, dealer policies or procedures and how it compares within the industry. With this stronger understanding they can pursue delivering that exceptional experience to a client.
Michael Konopaski is the co-founder of Designed Wealth Management.
