There are a couple of signs on the horizon that you should be paying attention to as an advisor.  The conversations around A, B, and C share pricing are more than trial balloons.  They portend the end of this type of compensation for Advisors and Brokers.  The promotion of Mary Shapiro to the head of the SEC also says that your old enemy is now your new enemy with more power and authority.  She doesn’t like you as an advisor and doesn’t believe you create value.  The final trend is the consolidation of broker dealers into the consolidation of banks.  Mary would like about 12 broker dealers to keep track of and not 4,500.

The trend lines will converge to create this type of environment:

1. 80% of the advisors will end up being salaried employees for banks and mutual funds with toll free numbers, model portfolios and a life that is so boring that it will make cud chewing seem like the Amazing Race.  Watch what Ken Lewis does with Merrill over the next few years.  It’s the model for the future.
2. 20% of the advisors will have a chance to shape their future for themselves and their clients.  They will reduce their dependency on fee income from portfolios and increase it around new capabilities that clients will pay for separately from asset management.
3. The independent RIA’s will have the front movers advantage for a while but know that Mary and her Morons want your compensation, status and influence reduced. Mary is under the mistaken assumption that we need more regulation. What we need is smarter people working at the SEC and greater enforcement of the regulation that we already have.

 Here are my thoughts on how you can begin to escape the environment above:

1. Create a Family Resource Center that combines the best of investment management capabilities with the other support that families need. You will need a separate company to do this.
2. Create a separate legal entity that provides these other capabilities that uses the service of your RIA but isn’t dependent upon it.
3. Establish a pricing model that works from a balance sheet basis for managing the information, conducting the meetings and facilitating with other advisors on behalf of the family.
4. Use a data aggregation platform like eMoneyadvisor to create a platform of technology support that can take advantage of the coming convergence of cell phones, web, and cloud computing to allow you 24/7/365 access with your clients and their other advisors.
5. Create a video learning channel inside this company to where you become the “source” of current and valuable information.  It may need to be established as a not for profit.  Media management will be incredibly important through all the channels.  You cannot wait for three weeks any longer for some 23 year old in compliance to approve your polysyllabic words when they don’t use them.  A separate learning channel brings you under the protection of the First Amendment and takes you out of Censorship world with Mary.
6. Become an “Agent of Convenience” while creating Federations of Support for your clients.  These are terms from “The Support Economy”, a brilliant book by Shoshanna Zuboff and her husband James Maxim.

Finally, get yourself out of the commodity business as quickly as you can.  Investment Management is a commodity and will be more so as we move forward.  The array of software and do it yourself capabilities will drive the need for specific personalized strategy and planning around more than just the investments.  The financial services business looks a lot more pastoral than it does product oriented going forward.  People will pay for processes that provide direction and capability.  You just have to create them.

Focus on your autonomy and independence.  Forget about the status and regulated industry you’ve been a part of for 20 years.  Your brand, identity, and level of service is about to become bigger than any of the old names and legacies.

Finally, just believe in you as much as I believe in you.  I have high hopes for you.