Light­ning Round With Jamie Price

It’s been a busy first year for Ad­vi­sor Group’s new chief ex­ec­u­tive. He re­sponds can­didly to rapid-fire ques­tions.

Financial Planning - - CONTENT - By Chelsea Emery

It’s been a busy first year for Ad­vi­sor Group’s chief ex­ec­u­tive. He re­sponds can­didly to rapid-fire ques­tions.

BUSY DOESN’T QUITE SUM UP JAMIE PRICE’S FIRST year as CEO of Ad­vi­sor Group. Among his many chal­lenges, the firm, which split off from AIG in 2016, had the her­culean task of ready­ing its net­work of in­de­pen­dent bro­ker-deal­ers for the first phase of the Depart­ment of La­bor’s fidu­ciary rule. Ad­vi­sor Group also in­tro­duced flat fees for its ad­vi­sory and bro­ker­age plat­forms and launched a low-min­i­mum ad­vi­sory ac­count for clients called Gen­e­sis Di­rect.

Com­ing months will not bring respite. Ex­ec­u­tives in all in­dus­tries are scru­ti­niz­ing com­pany cul­ture as em­ploy­ees speak out about sex­ual ha­rass­ment. Robo ad­vice is pres­sur­ing fees and mar­gins, and bit­coin’s rapid gain has many ad­vi­sors se­ri­ously eval­u­at­ing cy­ber­cur­ren­cies.

Price’s can­did re­sponses to a light­ning round of ques­tions fol­low. An­swers have been con­densed and edited.

Fi­nan­cial Plan­ning: What’s your take on cy­ber­cur­ren­cies such as bit­coin?

Price: It’s way early in the process but there will likely be a cryp­tocur­rency ca­pa­bil­ity, whether it’s bit­coin or some­thing else. The tech­nol­ogy that it runs on — blockchain — presents lots of in­ter­est­ing op­por­tu­ni­ties across a wide spec­trum of the fi­nan­cial ser­vices in­dus­try, be­yond the ac­tual cur­rency it­self.

On the in­vest­ment side, we’ll just say it looks kind of spec­u­la­tive to me. I think it’s way early to be plac­ing bets on what kind of cryp­tocur­rency [will be­come com­monly used], or whether bit­coin is the one. But I think ev­ery­body be­lieves, and I do as well, that dig­i­tal cur­rency is go­ing to have a place.

The tech­nol­ogy it runs on holds more in­ter­est­ing pos­si­bil­i­ties for the fi­nan­cial ser­vices in­dus­try, to es­sen­tially dis­ag­gre­gate value chains and repack­age them up one at a time, in a more ef­fi­cient way.

Fi­nan­cial Plan­ning: Do you see more of a role for robo


Price: Ab­so­lutely go­ing to be­come main­stream. Ad­vi­sors will be us­ing it, and the largest use of robo tech­nol­ogy over the next five years will be in the hands of main­stream ad­vi­sors who work with in­vestors.

We are build­ing our own dig­i­tal plat­form. It’s one of our big strate­gic ini­tia­tives. We have a four-party agree­ment: Jem­step, Ad­vi­sor Group, En­vest­net and Per­sh­ing. We are fully in­te­grat­ing all of our ac­count open­ing pro­cesses to go pa­per­less from the start. In­side of that, there will be a robo plat­form that can be lever­aged with var­i­ous clients to the full or par­tial de­gree that you want to lever­age it. It will be in­te­grated right in­side of our plat­form as a robo of­fer­ing.

Fi­nan­cial Plan­ning: How will rev­e­la­tions of sex­ual ha­rass­ment in the work­place af­fect the plan­ning in­dus­try?

Price: I think there will be a lot more train­ing and ed­u­ca­tion. The first ques­tions that have to be asked are: How di­verse is your com­pany — both within the top lead­er­ship and through­out? And how do you ac­tu­ally get open di­a­logue hap­pen­ing in­side of a com­pany, in a trust­ing way, where you as a com­pany can de­cide the cul­ture that all em­ploy­ees want to live by and hold their stan­dard up to?

We cer­tainly are do­ing that through our cul­tural val­ues, and through some of the train­ing and ed­u­ca­tion we plan to do this year. This also in­cludes pos­si­bly do­ing some­thing for ad­vi­sors. They could lever­age the ca­pa­bil­i­ties we have to help their own train­ing and ed­u­ca­tion ef­forts through­out

their own in­de­pen­dent or­ga­ni­za­tions.

Fi­nan­cial Plan­ning: What can be done to make suc­ces­sion plan­ning a higher pri­or­ity?

Price: It’s a ques­tion of risk man­age­ment. If you were work­ing in a big com­pany and didn’t have one in place, you’d be do­ing a dis­ser­vice to your clients and the vi­a­bil­ity of your prac­tice. I think ev­ery­body should have a suc­ces­sion plan. The ques­tion is, how ro­bust does it need to be? If you’re within 10 years [of re­tir­ing], you should have a plan in place. Your clients de­serve it.

My­suc­ces­sion­ just launched. We had a sub­scrip­tion rate goal and we’ve ex­ceeded that. We be­lieve there is a big op­por­tu­nity to help ad­vi­sors who — over the next year — ei­ther want to slow down and/ or want to have a suc­ces­sion plan. This ul­ti­mately could end up in a sale of the busi­ness, but may just be a suc­ces­sion be­fore a sale.

We want to be the firm that is viewed as pro­vid­ing ca­pa­bil­i­ties for them to do that seam­lessly, and quite frankly, to be able to do it in a way that gets at the soft is­sues first.

This is a le­gacy ques­tion, first and fore­most. How do they find like-minded in­di­vid­u­als who will con­tinue to han­dle the clients that are near and dear to their hearts? Who live in the com­mu­ni­ties they work in? Who are philo­soph­i­cally aligned — cul­tur­ally and in­vest­ment phi­los­o­phy-wise — how they want to han­dle clients? And find­ing that match first is the key be­fore money or any­thing else comes into play.

So our plat­form is built around anonymity, and be­ing able to go in and find a cul­tural fit first, and match buy­ers and sell­ers in a more el­e­gant way. And then of course we have our whole suc­ces­sion plan­ning depart­ment that helps fa­cil­i­tate that in a hard way, mean­ing con­tract­ing, build phi­los­o­phy, how you value busi­nesses, etc.

Fi­nan­cial Plan­ning: How do you ar­tic­u­late your strat­egy on fees?

Price: For us, it was sim­pli­fy­ing fees. In other words, not hav­ing mul­ti­ple types of fees but a flat fee where pos­si­ble.

When we went to our sin­gu­lar ticket charges for ad­vi­sors last year — $9 on ad­vi­sory,

$15 on bro­ker­age — it was to do away with all those lit­tle nickel-and-dime fees: the con­fer­ence fee, the mail fee, the state­ment fee. And have just a flat, one-time fee, which we’ve done.

Se­condly, it’s trans­parency. More and more ad­vi­sors are go­ing to show the full trans­parency of costs, in­clud­ing what the ad­vi­sor them­selves is tack­ing on for their ad­vice and what a client is truly pay­ing all-in, no mat­ter what the prod­uct is or what the choices of prod­uct are.

Trans­parency leads to a level of trust and hon­esty, and it doesn’t pre­clude you from pick­ing the right so­lu­tion. Even if it costs more, if it’s the right so­lu­tion, it should per­form as it is in­tended to do.

Trans­parency is a way for ad­vi­sors to bring one more piece of value to a com­pli­cated is­sue with clients, to be the light that shines on trans­parency and open­ness, for clients to make bet­ter in­formed de­ci­sions. Fi­nan­cial Plan­ning: What is your fidu­ciary out­look?

Price: Ob­vi­ously, we are in the im­par­tial con­duct stan­dards now, which means we are in a fidu­ciary era, and have to op­er­ate as one.

Those stan­dards are pretty clear, from June 9. The rest of the bill got pushed out to June 2019.

Our view is that the SEC is ac­tively look­ing to pick up the man­tle here and ei­ther work with the DOL, or cre­ate a fidu­ciary stan­dard them­selves that we hope will cross both qual­i­fied and non­qual­i­fied busi­ness.

Fi­nan­cial Plan­ning: What else is top of mind for you right now?

Price: This year, the stuff we’re go­ing to be talk­ing to our ad­vi­sors about is, what will the next five years look like?

We be­lieve fee com­pres­sion is go­ing to con­tinue to hap­pen, as you get more trans­par­ent, and new en­trants like robo will al­low clients to have scal­able of­fer­ings for a price. I think ad­vi­sors will be still hugely valu­able, but they’re go­ing to have to re­ori­ent their value propo­si­tion to be more all-en­com­pass­ing. And they’re go­ing to have to man­age more as­sets in or­der to con­tinue to grow.

“If you’re within 10 years [of re­tir­ing], you should have a plan in place. Your clients de­serve it,” says Ad­vi­sor Group CEO Jamie Price.

“Dig­i­tal cur­rency is go­ing to have a place,” says Ad­vi­sor Group CEO Jamie Price.

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