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Investment advisers adjust to changing industry tide

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Some wealth advisers see their industry as being at an inflection point.

Technology like robo-advisers lets them interact with clients in ways they never could before. A litany of tighter regulations put forward by the last presidential administration faces an uncertain future under President Donald Trump. Marketing savvy and personal touches are more crucial than ever to draw in the next generation of clients.

Sometimes meeting these needs means trying something new. Two veteran advisory firms in the midstate are among those doing just that.

Cumberland County-based Conte Wealth Advisors is launching a division dedicated to helping independent advisers with the kinds of administrative and marketing tasks that can prove difficult for smaller operations. Firm leaders believe their approach to these services is unlike anything anyone else has tried to offer.

Also in Cumberland County, adviser Jim DeGaetano Jr. left a firm where he had worked for 10 years to start his own business. Although he is not the first person to start an independent practice, he believes the option will become increasingly popular as advisers seek the freedom to adapt quickly to advancing technology and changing regulations.

Both firms are, in their own ways, looking to catch a wave in their industry’s shifting tide.

Going solo

DeGaetano used to spend the first 10 to 15 minutes of every client appointment collecting basic data: bank balances, 401(k) information and the like.

Now, he has software that lets clients input that information themselves, freeing up their appointment for actual conversations about how best to manage and invest their money.

The change is one of many DeGaetano has instituted since leaving the larger firm, Texas-based First Command Financial Services, and starting his own business.

DeGaetano opened Diamond Wealth Advisors in South Middleton Township. He had a staff of three and about $55 million in assets under management as of early May, about three months into the venture.

Breaking off from the firm where he had invested 10 years of his life seemed like the logical way to bridge what he felt was a gap between the kinds of services clients needed and the ones the firm he was tied to was able to provide. He wanted technology, his own brand and the freedom to customize offerings for each client, as opposed to offering a cookie-cutter solution for everyone.

He suspects other advisers are starting to feel the same way.

The Bureau of Labor Statistics predicts employment for personal financial advisers will grow 30 percent in the next 10 years. That rate is much faster than that of the rest of the job market, largely because of the growing population of baby boomers who will need retirement advice and the declining number of companies offering pension plans.

As demand rises, the need to roll quickly with every technological and regulatory change becomes even more important. Firms rooted in the past may lack flexibility, DeGaetano said.

“What you’re going to see is that the upper echelon of advisers, the ones that are going to be successful wherever they go, saying, ‘What’s the most fertile environment for my business to be able to serve my clients so I can do this to the best of my ability?’” he said.

That’s not to say the only way advisers can adapt is to go off on their own. Some long-established firms, like Harrisburg-based Roof Advisory Group, have also found ways to roll with the changes.

Jeffrey Roof founded the firm in 1998 — a time when buying bonds required receiving faxes and making phone calls, said Bryson Roof, Jeffrey Roof’s son and an adviser with the firm.

Roof has, like many firms, adapted to changing technologies, as well as the ebb and flow of regulatory demands. Bryson Roof, however, credits much of the firm’s success to its ability to act in clients’ best interest, a task made easier by its boutique, independent structure.

An Obama-era regulation often called the “fiduciary rule” would force all advisers to act as fiduciaries — meaning in their clients’ best interests — when handling retirement accounts.

Roof Advisory has always acted in a fiduciary capacity. Even if Trump ends up repealing the rule, Roof thinks the firm’s strategy will continue to play well with clients. That includes everyone from baby boomers and Gen Xers, who are trying to plan not only for themselves but also their children and aging parents, to millennials, who tend to be more fee-conscious and ask more questions than their parents.

DeGaetano is eyeing a similar strategy as he makes his start.

“The best way for me to do that was to make sure I had control of my own firm,” he said.

DeGaetano hopes to continue growing organically through word-of-mouth and advertising campaigns. Eventually, he plans to absorb clients from older advisers as they get ready to leave the industry, as well as take in other advisers like himself who want to try a new approach.

These advisers would operate under the Diamond Wealth name but have the freedom to develop their business as they see fit, and if they eventually want to break off on their own, they would be welcome to do so. But DeGaetano hopes to create an environment where they won’t want to.

On the grid

Frank and Tony Conte know all too well the struggles of going solo. So they decided to do something to make the process easier.

The father-son team broke off from Prudential Financial in 2005 to launch Cumberland County-based Conte Wealth Advisors. Their firm has since grown to about 20 people, including staff and advisers, plus Bailey, the elder Conte’s 5-year-old Shih Tzu/Maltese mix who acts as “director of first impressions.”

At the beginning, the Contes found themselves hungry for more knowledge about the products available to them, as well as the networking support of people who had already traveled the path ahead of them. And as the firm grew, they needed more staff who could handle non-advising tasks like event planning and paperwork.

They have spent the past 12 years building the systems to handle those duties efficiently. Their new endeavor, The Independent Grid, looks to open those tried-and-true processes to other advisers stepping out on their own.

The Independent Grid offers a menu of ala carte services like marketing, succession planning, administrative work and business development consultation. The idea is to help advisers with the tasks they may not have the resources to handle, while letting them maintain their individual brand.

“So many advisers when they get into the industry, they envision themselves being the entrepreneur. It’s my practice. It’s my clientele. But when you get into it, because there’s so many different avenues to enter this industry, oftentimes they find that maybe that’s not the case,” said Trent Gain, Conte’s director of business development.

Advisers working for other people might find themselves forced to sell a certain product, or carry a certain brand. The Independent Grid aims to help them run their businesses the way they want to.

“We want to be that full-service, turn-key, adviser-centered platform and almost be like that fire extinguisher behind a glass case. If you need us, just break the glass,” Gain said.

Tony Conte realized after he and his father went solo that wealth advisers lacked the kind of consulting and back-office resources available in other industries. As his firm developed those services in-house, it seemed like a natural, and easy, move to extend those same services to advisers not carrying the Conte Wealth Advisors brand.

Although some broker-dealers and other businesses offer similar services, the people behind The Independent Grid aim to offer a level of breadth, personalization and one-on-one familiarity with clients’ businesses they feel is not available anywhere else in the industry.

“Until somebody else steps in and starts doing this exact same thing, it’s a wide-open market,” Conte said.

Conte and Gain hope to make The Independent Grid a nationwide resource — a goal, they said, that is not as far-flung as it might sound to people unfamiliar with the industry.

Conte Wealth Advisors has already fine-tuned the art of connecting people who are not in the same room, having opened an office in Florida in 2013. And financial advisers tend to talk to and know each other regardless of where they operate, Conte said.

Their goal is to have about 100 advisers on The Grid in the next five years, starting with maybe 30 by this time next year. They already have about 10 to 20 advisers looking into the possibility of joining them.

After that, next steps will include adding more staff, including eventually a CFO and maybe a tech person, as needed. For now, the firm already has most of the resources it needs to lift the new venture off the ground.

The Independent Grid officially launches the week of May 22. The people behind the project believe that once word gets out about what they can offer, business will follow from there.

“Advisers didn’t get into this business to do paperwork,” Gain said.

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Jennifer Wentz

Jennifer Wentz

Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com. Follow her on Twitter, @jenni_wentz.

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