Q/A: Wealth Advisory

Q/A: Wealth Advisory

A Q&A with Steven D. Lockshin, Founder of AdvicePeriod and Chairman of Convergent Wealth Advisors

Registered Investment Advisors (RIA) and Multi-Family Of ces (MFO)

The Hard Questions


AR: Is the investment advisory business a
true profession with educational requirements, professional ethics, comprehensive testing, internship for those entering the profession and yearly continuing educational requirements (i.e. physicians, attorney, accountants, engineers, etc.)?

SL: I think the answer is evident in the lack of a widely accepted and accredited curriculum for Advisors. Most people recognize the designations as a CPA,
MD, or JD. Few recognize the many competing certi cations in the registered investment advisory (RIA) industry. Moreover, the prior designations are required for those professionals to practice, while there is no formal education requirement and only a simple, short exam required to become registered as an Advisor.

AR: Many RIAs where rst registered reps (traditionally within a broker-dealer, often a large bank broker-dealer known as wirehouse registered reps), is such an environment – especially if a large global brand – a good training ground? Isn’t the “name of the game” gathering assets? If so, would that not also be true for RIAs?

SL: Unfortunately you can be the smartest person in the world; but if nobody hears what you have to say, what’s the value? Said differently, you must have clients rst in order to serve them. Moreover, in order to earn a living (as an Advisor) you very often have to gather assets in order to have something to bill on given that the assets under management (AUM) convention for billing remains intact. For most of my clients I try to orchestrate a at rate that re ects the value we add, our risk, and the complexity of the relationship. This structure – once the fee has been agreed upon – effectively eliminates con icts of interest.

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