I'm not breaking news when I say that there's been rifting of the broker-dealer business model in recent years. After witnessing snarky comments on Twitter over the past few weeks, I felt the need to get these thoughts out there.

Carl Richards is fond of saying, “if I just knew the story.” 

So, let me tell my story. Perhaps it will provide some context.

When I made the decision to go out on my own in 2015, the original plan was to start my own Registered Investment Advisory (RIA) firm from the ground up. The vast majority of my business was fee-based and planning focused, and that was the clear path forward in the financial planning community. I was raised in this fiduciary environment, in large part due to the online mentorship of a growing Fintwit community.

As I was navigating the early parts of this transition, an unforeseen opportunity presented itself.

I received a call from a former colleague who was with Voya Financial Advisers (VFA.) Their decision to work with VFA was primarily based on their work with Voya retirement plans and their participants. This particular office was interested in partnering with another adviser who they could transition the business to as part of a continuity plan.

I suddenly had a choice to make. Do I go full blown RIA and pass up this opportunity, or do I transition to VFA? 

Doug Boneparth (at the time, still affiliated with a broker-dealer in a hybrid role) had a conversation on Justin Castelli’s podcast last fall that really stuck with me:

“Notice how for both of us, how we structure our business is the driver here, not motivations of financial gain or how we sell things. I love that we’ve chosen different paths on how we’ve structured our business, and yet operate morally, and our behaviors are aligned.”

Doug closes with this:

“I really hope that, certainly with young planners, I hope that you’re not getting caught up in this debate (broker-dealer versus RIA) at the expense of growing your business.”

Ultimately, I chose to pursue the VFA path because I believed it gave me a better opportunity to succeed. My existing clients were going to be taken care of irrespective of the back office, and I had a very attractive path forward.

Nearly four years later, I don't regret my decision one bit. Our work with Voya retirement plan participants has been meaningful - I had forgotten how rewarding it is to get twenty somethings involved with their first retirement plan. It has also provided me an opportunity to work with some of these retirement plan participants in a personal, private client capacity. I’ve met and worked with wonderful people that I never would have had an opportunity to meet had I not gone down this path.

Moving forward, I would encourage advisers to let your value and services stand on their own merits, and stay away from blanket bashing other companies or business models. Yes - there are still conflicts of interest and improvements that can be made. I am not here to defend some of the stuff that still goes on.

But focus on letting your own work speak for itself, and be more mindful of the 'story' of other advisers. The quality of the team/individual providing advice is far more impactful on client outcomes than the back office providing the compliance and technology to the adviser.

I’ll finish with this from Michael Kitces, who wrote a recent post on the convergence of the broker-dealer and RIA business models:

"In the long run, though, arguably the best path forward for most advisors will simply be to actually differentiate on their services and what they actually do for clients, rather than their standard of conduct in the first place. As the irony is that, the more fiduciary advocates push for higher standards across the industry… the less likely it is that being a fiduciary with higher standards will ever be an effective differentiator again in the future."

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Sources: 

The Great Convergence And The Death Of Fiduciary Differentiation (For RIAs) via kitces.com

Financial Planning for Young Professionals via All About Your Benjamin's