Written by industry journalist and long-time HIFON advocate: Bob Veres, of Inside Information.     

Some years ago now, I read a Cerulli report which purported to predict the future of the ‘independent RIA channel,’ or some such thing.  I normally did (and still do) ignore the Cerulli research because I think they understand the brokerage and independent BD models much better than the fiduciary advisors, and they categorize every sector of advice into ‘channels,’ which means they see the world primarily in terms of product distribution rather than serving clients.

Anyway, this particular report boldly predicted that the independent advice channel would bifurcate the people who serve clients into two categories: the technical specialists who would create the financial plans and give advice on tax, retirement and estate planning etc., and client relationship managers who would provide the personalized service and often deliver the plans that the specialists created.

Client relationships, in other words, would be formed between clients and people who were not necessarily versed in actual planning.  I thought of them as schmoozers.  Cerulli concluded that this would be a more cost-effective way of managing an advisory firm clientele.

Needless to say, this silly idea didn’t take hold and the prediction looks a bit ridiculous today.  But the other interesting thing about the report was that it totally ignored the other 50-70 percent of the advisory firm staff: the operations team.

I predicted in presentations and in a report on the advisory firm of the future that advisors would indeed be increasingly leveraged in their client-facing activities—not by professional schmoozers, but by experienced operations staff, who have quietly been moving into a lot of other roles in their firms.  More time-saving software features adds up to more free time for the ops staff, and the more forward-looking companies are now asking operations professionals to handle a lot of client-interacting calls about their paperwork, their check requests, their log-ins etc.

And the trend won’t stop there.  Anybody who has come to our Insider’s Forum conference has had the chance to rub elbows with some of the most advanced operations team members in the country, who attend—and also speak at—the pre conference HIFON (https://hifon.org/) sessions and our operations educational track.  A surprising number of them (surprising to the founding generation attendees, anyway) have moved into COO and CEO roles with their firms—basically managing the day-to-day across all functions.

And, if you think about it, most of the efficiency advances our profession has been making—in software adoption, workflows, seamless onboarding, custodial interfacing and even tax-loss harvesting and rebalancing—are managed or directly handled by team members who are not lead advisors.  Our ops sessions are full of innovation and efficiency ideas traded freely among the attendees, who increasingly see their role as ‘managing change’ with minimal disruption to the advice side.

I think this is how pundits and consultants develop blind spots—in Cerulli’s case, by only considering important those team members who are involved in the all-important distribution of products, perhaps believing that 50-70 percent of the people actively participating in the advisor offices are unimportant, faceless, interchangeable, menial grunts with their noses buried in paperwork and their hands occupied by rote tasks that will eventually be taken over by robots.

Every year, advisors in what Cerulli calls the ‘independent channel’ come to our preconference ops sessions out of curiosity, and afterwards they will tell me that those presentations were more interesting, richer and more innovative than anything they have seen elsewhere on the conference circuit.  The professional conferences, consultants and writers in our space who ignore what I think of as the operations revolution are consistently missing some of the most interesting and powerful evolutionary lines of force in the advice profession.