A businessman and three businessmen are tied with ropes and run in opposite directions, the concept of business competition and conflict
istock/ sesame


Earlier in 2023 we discussed observations we’ve had while recruiting advisors in the last 2 years. As we share our thoughts and ideas with advisors, we like to choose themes and topics that get people talking. Our 2023 series is designed to be thought provoking, by coming up with new ways of looking at old conversations. Up next, we reflect on challenging the status quo of the “Built to Flip” investment dealer when building Designed Wealth Management.

When we talk to senior people at our competitors, they talk about turning assets under administration (AUA) into assets under management (AUM), return on investment, and scale. Most of them carry a focus on the dealer’s objectives, as opposed to the objectives of advisors or clients. At Designed Wealth, we decided to go in the other direction and challenge the status quo in every possible way. But why challenge the status quo? Honestly, the status quo isn’t very good in the industry.

If this is our belief, our aim is to deliver alternative insights that demonstrate why the existing conditions of the industry deserve to be challenged. Here are three “status quos” in the industry that we challenge:

1. Status quo #1 – The status quo says you can’t make any money running a flat–fee investment dealer. In our experience in building a flat–fee dealer, this statement is illogical. Those arguing that our business model doesn’t work are often found a) paying for things advisors don’t need or use (financial planning software, CRM tools, etc., b) paying for office space overhead beyond what is needed, c) with top heavy management where corner office salaries don’t bring added value), d) using legacy platforms duct–taped together, and e) with vendor contracts that haven’t been vetted to suit the financial model of the firm. The status quo focuses too much on how top line revenue needs to squeeze as much as possible out of its’ advisor base. Challenging the status quo means focusing on appropriate cost management.

2. Status quo #2 – The status quo says every business needs to scale. What is scale? It’s when revenue increases without a substantial increase in resources. To capture the right perspective, we first ask, why scale? Scale helps you grow quickly. It allows you to do more, with less and keep things homogeneous.  We understand the appeal, but challenge whether this matters to advisors, or their clients? Instead, we focus on the simultaneous pursuit of differentiation and low cost. We developed our business model on the idea of creating an enduring, great dealer. Our competitors look at us as if we are crazy. Most other dealers are not interested in enduring, great companies. For them, there is no need to build a great dealer because they are building to flip.

3. Status quo #3 – The status quo is that technology is a strategy. In general, IT of any sort is not a strategy. Technology is a tool, or a medium to deliver certain services, but it is not a strategy. For a dealer to say they have an IT based strategy means they have no real strategy at all. There is a long list of things far more important than technology in an advisor’s practice, that support building the right relationships with their clients.

Many of our competitors have moved away from the flat–fee, and most other dealers are increasing their focus on proprietary investment products. In reality, most investment dealers are either fund companies, or becoming fund companies. That’s because their goals are driven by the shareholders of their parent companies. Alternatively, they’ve exhausted the extent to which they can squeeze advisors or clients, and the shift to AUM is needed to support their bottom line and the bells and whistles they decide advisors need. The 5–star technology platforms are financed by their advisor’s referring business to their in–house pooled funds or designed to focus on the dealer’s script and brand, ultimately attempting to leverage the advisor to reach the client. In short, as our competitors are turning AUA into AUM, those not on the bus, are asked or groomed to leave.

As an alternative, we help our advisors concentrate on freedom, meaning and self–direction in their work. How can a dealer help advisors do something they are passionate about if the sole focus is scale and profit? In today’s environment, the status quo needs to be challenged, and our belief is that there are advisors wanting to be heard and looking to be part of something different. That’s why we’re here.