June 2023 • www . fa-mag . com

Grown-ups Need Prenups Women who ’ ve left the workforce should think of prenups as income replacement insurance .

Good News At Last For LTC Insurance

Rising interest rates have allowed this industry to make up for past errors .

KNOWLEDGE FOR THE SOPHISTICATED ADVISOR

Gresham : Do Like These Firms The fastest growers aren ’ t just talking to clients about investments .

FA asked investment specialists how they ’ re shuffling portfolios in a high-interest-rate world .

T LAST NOVEMBER ’ S SCHWAB IMPACT CONFERENCE IN

Denver , I ran into a young advisor who had just been named CEO of a big Midwestern RIA . He was still in his 30s , and if any young advisor was up to the challenge of running a business with $ 4 billion in assets and more than 1,000 clients , I ’ d bet on this advisor .

He knew he was given a great opportunity , but he also had a chuckle or two about his circumstances . The firm ’ s founders had cashed out at the peak of the market , and he was now reporting to a group of private equity investors after being hit with a 25 % bear market during his first six months alone at the helm .

This advisor was grateful to the firm ’ s founders who believed in him and rapidly promoted him to the top spot . And since they had built the firm from nothing , he thought they had earned every dollar of the premium price paid by his new private equity bosses .

Being a realist with a long time horizon , he wasn ’ t particularly concerned about starting his CEO job in the middle of a bear market . No one , not clients nor the new owners nor the employees were going to pin that on him , and he knew enough history to recognize that lots of great businesses are reconceived during times of rapid change .

After the first generation of advisors retired and , in many cases , sold out in 2020 or 2021 at the top of the market , I can ’ t help but wonder how

This advisor was grateful to the firm ’ s founders who believed in him and rapidly promoted him to the top spot .

many next-gen advisors will embrace the challenge with the same enthusiasm as this advisor .

Many of the new entrants to the advisor space are coming from the accounting profession . This has its benefits — one of the most important being that advisors from this space will be well-trained technically . Even if they lack the entrepreneurial flair of yesteryear ’ s rainmakers , these next-gen advisors probably can sell a large advisory firm ’ s brand , even if they would struggle to market their own small shop .

How this next chapter of the business evolves remains to be seen . We are only in the first inning .

Many private equity firms have dealt themselves a controlling hand , but how they play it is anyone ’ s guess . If they overplay and upset advisor-client relationships , they could regret it . Most are smart enough to realize that .

Evan Simonoff

Email me at esimonoff @ fa-mag . com with your opinion .

8 | FINANCIAL ADVISOR MAGAZINE | JUNE 2023 WWW . FA-MAG . COM