Tech firms join forces to advise breakaway brokers

FWR Staff

24 December 2008

IATF out to help ex-wirehouse advisors set up indie investment advisories. A group of companies that provide technologies to independent investment advisors and financial planners have established the Independent Advisor Technology Forum to help brokers exiting full-service firms set up on their own.

"The recent turmoil on Wall Street has impacted the financial-advisor industry substantially, and as many leave their firms in the wake of this year's economic conditions they are beginning to form their own independent advisory firms," says Nien-Ling Wacker, president of IATF member Laserfiche, a Long Beach, Calif.-based provider of document-management technologies. "IATF will provide them with document management solutions and best practices, as well as the technology tools they need for investment and financial planning services."

Interested parties

In fact the jury is still out on how many brokers are leaving big-name outfits to set up on their own. Two months ago, the Boston-based research and consulting firm Aite Group said that 16,500 wirehouse advisors were thinking of going independent in the immediate wake of Lehman Brothers' collapse, Merrill Lynch 's decision to become part of Bank of America, Wells Fargo's agreement to acquire Wachovia, and in the midst of a dramatic, general and ongoing drop in financial-company share prices. That would be about 30% of the total wirehouse-advisor headcount -- a startling, if unlikely, outcome that could spell disaster for some of the firms in question.

Meanwhile RIA custodians like Fidelity and Schwab say they're seeing more ex-wirehouse brokers establishing RIAs, but the actual data to date doesn't point to an especially sharp increase.

Because industry sources suggest it takes most brokers at least half a year to set up an RIA, the extent to which brokers are breaking away from full-service firms will probably be more apparent in 2009.

In any case, IATF members recognize that brokers who have grown accustomed to wirehouse-style infrastructure face a daunting challenge when it comes to selecting and integrating the technologies they need to remain competitive as independents.

Many of these advisors have "never had to build an investment practice from the ground up and this requirement can be an obstacle for going independent," according to Timothy Welsh of IATF member Nexus Strategy, a Larkspur, Calif.-based business-development and practice-management consultancy. IATF "will be a key resource for advisors that will help them find all of the information they need in one place to make the right technology purchasing decisions and make the transition easier."

Other IATF founding members are Palm Beach Gardens, Fla.-based CRM-technology maker Junxure, Jacksonville, Fla.-based performance-report provider Black Diamond, Miami-based investment-policy-statement toolmaker IPS AdvisorPro and Ontario, Calif.-based financial-form software maker Laser App.

The IATF's " Technology CheckList " page is a good resource. -FWR

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