As the wealth management industry has consolidated and become commoditized over the past few years, the boutique model has taken flight. Financial advisors with a penchant for entrepreneurship have sought out firms who offer them an opportunity for autonomous business growth and wirehouse-caliber resources without top-down control.
Recently, AdvisorHub spoke with Craig Pirtle, Chief Strategy Officer, B. Riley Wealth Management, an emerging boutique firm, about the larger trends across the financial services industry and the excitement around his own firm.
What are the main trends in the advisor business you are seeing amid the tumult of 2020? Are they a continuation of past trends, or an acceleration of new trends?
I think we are seeing a few different trends as advisors look for ways to customize solutions to better serve their clients.
In the past, the financial services industry was dominated by the big four or five wirehouses, but advisors still had choices. There were several opportunities to join high-quality boutique firms formed by legacy family offices where top advisors could thrive. These firms were focused on providing concierge service to the ultra-high net worth community. Other boutique firms offered clients customized solutions and higher levels of relationship development; the second generation of those firms are currently rising in the industry.
In recent years, the industry has seen a reemergence of boutique firms as advisors and their clients seek out more custom, proprietary capabilities to suit their needs. In a cultural shift, advisors have realized the importance of relationship development over firm size and brand recognition. These up-and-coming firms offer clients a more tailored, concierge approach to wealth management.
While this is an exciting time in our business, many of these boutiques are only a shell of what they once were, as they are solely based on what their larger clearing firms can provide. They lack the infrastructure necessary to support the advisor, which ultimately forces them to sacrifice the proprietary capabilities essential for advisors seeking alternatives to larger firms and wirehouses.
How specifically has COVID-19, the markets, social unrest, and a divisive political environment affected this trend? Will it continue?
Most recently, the COVID-19 pandemic coupled with all the social unrest we're seeing has served to highlight and accelerate the need for advisors to provide their clients with a higher level of client service than ever before. The environment has necessitated a shift in the way advisors manage their practices. Boutique firms can adapt and provide these services, which cover not only the lifelong needs of the client, but their family and business interests as well.
Authentic boutique firms bring together the two: they provide custom, proprietary offerings that better serve the client along with the culture and size that many advisors seek.
Advisors are voting with their feet and leaving traditional firms for many of the reasons you mentioned. How are you all set up to respond to the demand out there? I guess what I'm asking is: How can a small firm compete?
Because B. Riley Wealth Management is part of a larger, diversified, publicly traded company, we are positioned as an established boutique firm with true proprietary capabilities. This makes us an authentic version of what the competition is trying to create.
As a subsidiary of B. Riley Financial (RILY), B. Riley Wealth Management provides its clients with a comprehensive platform backed by a powerful infrastructure of proprietary capabilities and services. As such, B. Riley Financial has a strong balance sheet allowing for the support and growth of a premier boutique wealth management group.
You mentioned that B. Riley Wealth is an "authentic" version of what competitors are trying to create. What do you mean by that?
Simply put, the capabilities and infrastructure offered through the B. Riley Financial ("B. Riley") platform. B. Riley was already established as a diverse financial services platform before wealth management was integrated - not the reverse. Other firms tend to start with wealth management first, and then chase down the addition of other expertise and services later. That is what separates us from more traditional boutique firms.
More specifically, what are
the elements—in your opinion—that separate so-called "wanna be" boutiques from
A "real" boutique firm provides viable options and access- to resources and leadership - so that advisors can best support their clients' needs; especially now. We have an open architecture platform, and advisors have access to B. Riley's 50+ capabilities across eight areas of expertise, including award winning small- and mid-cap research and a leading full-service investment bank through B. Riley Securities. The platform also offers specialty financial advisory services, appraisal and valuation services, and real estate solutions, all under one roof, plus 50 offices nationwide as part of a publicly traded company with a strong balance sheet.
We offer direct connections to meaningful business opportunities that advisors can tap into for growth while servicing and supporting their clients' needs. We have a flat structure and firm leadership is truly approachable; advisors can talk to department heads and secure help for their clients.
The differences between a boutique and an RIA revolve around structure and service. However, a lot of advisors, while they would like support and some new products to sell, just want to be independent contractors. While they appreciate the boutique idea, what they really mean is, "Hey, I want my independence."
We offer both fully independent and W-2 channel options, and we provide opportunities for advisors across either spectrum to become part of the firm. The difference for advisors at B. Riley Wealth Management is support. The firm offers its institution-caliber resources and proprietary services equally to either type of advisor without preference: operations, compliance, technology, product support and most importantly, leadership support.
We look for high-quality advisors with a stellar track record of service and support to their clients regardless of the channel they choose. They typically have an entrepreneurial mindset, are collaborative, and they are true fiduciaries. Several advisors have joined us from major firms like UBS, Morgan Stanley, JP Morgan, Raymond James and Stifel.
Any final thoughts on where we are headed in 2021?
This past year has only emphasized the importance of the advisor-client relationship. For a financial advisor that is truly there for his or her clients there is nothing (be it COVID-19, social unrest, or higher taxes), can affect that relationship. In fact, a tumultuous market environment only increases the value of a talented financial advisor.
B. Riley Wealth Management is part of a fast-growing, publicly owned, diversified financial services firm, B. Riley Financial (NASDAQ: RILY). Over the past six years, B. Riley has acquired well-known financial services companies offering a range of solutions, including B. Riley Securities (formerly B. Riley FBR)) and B. Riley Advisory Services (formerly GlassRatner and Great American Group).
Looking to make a move? If you are an advisor looking for a firm where you can have a larger
voice and a more attractive compensation structure, while remaining part of an
institutional platform with access to a multitude of capabilities and services,
B. Riley Wealth Management is for you. Click here to learn more.