September 2024 • www . fa-mag . com

AST NOVEMBER , PHILIP PALAVEEV OF THE ENSEMBLE Practice and Stacey McKinnon of Morton Wealth authored a cover story for Financial Advisor contending that young advisors dissatisfied with their positions in their firms would simply leave and launch their own entities . Shortly thereafter , other consultants to the profession contacted me and said they were engaged in multiple conversations with young advisors at big firms discussing going independent .

In this month ’ s cover story , Palaveev tackles another related problem coursing its way through the business . Based on a survey the Ensemble Practice conducted with BlackRock , the advisory industry ’ s profitability has surged in the last decade to levels that appear unsustainable — at the same time employee turnover is rising .

Anytime industry profits reach the average of 38.4 % that the survey found , it ’ s inevitable that new competitors will emerge . But in my own experience as someone who has observed a range of industries with amazing profits — from drugstores to food to newspapers — I know nothing lasts forever .

Palaveev predicts that the recruiting wars that have raged for years in the wirehouses and independent brokerage firms are about to come to independent advisory shops as well . They already are starting , as this year the business has , in all likelihood , seen more firms suing one another than in any prior year .

Thanks to this surge in profits and a dramatic rise in wealth across America , first-class airline tickets are now affordable for many advisors and their clients . A few decades ago , most clients and advisors would have scoffed at this idea as profligate .

Anytime industry profits reach the average of 38.4 % that the survey found , it ’ s inevitable that new competitors will emerge .

KNOWLEDGE FOR THE SOPHISTICATED ADVISOR

High profits are going to force the RIA culture to change in unsettling ways .

A Disappointing ( But Expected ) IRA Rule

Inheritors must take distributions every year .

Taking Care of Business ( After A Divorce )

Spouses breaking up shouldn ’ t take a business down with them .

‘ Can We Play ?’

Sports teams are letting in private capital .

An article in this issue on page 27 by CEG Worldwide ’ s John Bowen Jr . addresses the expanding market of the ultra-affluent . Winning these individuals as clients isn ’ t going to be easy , since their problems tend to be more complicated . Their issues also are multi-generational , which makes building relationships with their offspring all the more important if one hopes to retain their assets .

Not many advisors are doing that , according to Keven DuComb of Altfest Personal Wealth Management . Like Bowen , DuComb offers some ideas of his own about bridging the gap with different generations of clients .

If advisory firms hope to retain their record levels of profit , they will face two options . First , they can attempt to dramatically raise their intergenerational client retention rates . Second , they can create strategies to win over the next , younger generation of wealth creators . It ’ s a safe bet that many of the new firms we see announcing their launches will do exactly that in the next decade .

Evan Simonoff

Email me at esimonoff @ famagazine . com with your opinion .

8 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2024 WWW . FA-MAG . COM