Unlock your independence

Best Practices for Operations

Welcome back to another episode of the Independence Playbook. In today’s episode, Angela Gingras, Chief Administrative Officer, joins John. Angela has deep experience in RIA operations and can provide great insight into best practices for advisors transitioning to a fully independent model.

Podcast Transcript

JOHN: Hello.  I’m John Sullivan and I head up Business Development for Dynasty Financial Partners.  I am hosting this podcast series called “The “Independence Playbook.”

In this episode, I am going to be interviewing Angela Gingras who is the chief administrative officer for Dynasty Financial Partners.  Angela has deep experience in operations and can discuss best practices for RIAs when it comes to transitioning to independence.

— Good morning, Angela.  How are you today?

ANGELA GINGRAS: Great, John.  Thank you for having me.  I’m looking forward to our conversation.

JOHN: I know you get a barrage of operations questions from advisors that are considering moving to independence.  So let’s dive right in.  What are the biggest challenges advisors face when it comes to thinking about operations as they move over to the independent channel?

ANGELA: Absolutely.  When interacting with advisors about the operations’ side of the business, it’s really fascinating because if you think about it, they’re really not operations professionals.  They’re excellent at their craft, they interact with clients, but in my mind, there’s really three main questions that jump out in those conversations.

The first is all the different service and technology choices that are out in the marketplace.  Because they don’t focus on operations as a key component of their day-to-day, it can be a little overwhelming and sometimes, a bit challenging to understand what are the key features that will help them to provide scale while also running an efficient business?

So that’s typically one of the questions we come across is being able to help them to narrow down those choices because there are just a multitude of them.  And many times, they’re very similar in nature.

[00:02:00] And with that said, becoming an operations expert, they don’t really want to take off the client hat or the investment hat or the business owner hat but rather maybe engage someone who understands whether or not they need to have somebody in-house or if it’s something that they should really outsource because from an operations point of view, it’s not just the initial conversation but then in the ongoing scale and perfection around how that service experience will look like for the client.

And then the last but at least is, who are those custodial partners that will interact nicely with any operations, service, technology or offerings that their clients will engage with as they onboard their clients, and then go throughout the life cycle with that client themselves.

And interaction and integration is important.  And if those pieces are not there, it might become a little frustrating as they are seeking out the best options available to them.

JOHN: Yeah.  That’s interesting.  And that’s kind of the high-level operations, top level questions that an advisor, you know, might be thinking of or asking.  But when they get a little deeper into the weeds on specific examples of how service would be performed as it relates to their operational structure in the independent side, can you kind of give us some color on that?

ANGELA: Absolutely.  So the first thing, especially early on in those conversations, it is critical for them to understand what will the experience be for their end client.

So operationally, wherever they may be doing business today — they’re very familiar with that — they may have resources either within their office or, you know, at an extended level that can help them to better decipher what is going on in a client’s account or what their needs may be.

But as they’re thinking about making a change, whether it be a technology change or going to the independent model, it may come down to how quickly did that happen for my clients and how can they decide that this is not impactful to them so that it’s seamless and they can continue to do business and really focus on the relationship and not necessarily the operational components.

[00:04:00] But then as they get further into their due diligence process, they also have to understand the service.  So there’s the technical and mechanical aspect of it.  There’s the client onboarding piece.  But then what about the service?  Who can respond to their situations?  Who understands their business?

And if there are special nuances or types of clients that they work with, how can that service component, that partner, assist them better to make sure that the client is getting everything that they need?

But last but not least, there’s also a level of expertise and training that might go on with this choice.  So operationally, if it’s a service partner or a technology, what’s the complexity level of that?  You know, how much are they going to have to invest?  How much would their people need to invest?

And is it something that is simple for the client, if in fact, the client has a portal or will be engaging that service partner and/or the technology that’s being utilized there.

So that should all be within an assessment that this advisor should be thinking about as they’re performing some degree of due diligence to make sure that they choose those right partners.

JOHN: That’s great, Angela.  So, you know, as I educate advisors every day, and we talk about things like operations and we take them through this sort of process and expectations and they do their due diligence… But I think either way, no matter how much work is done upfront, there’s always going to be some surprises.  So can you explain what some of the biggest surprises might be that they’ll find once they’re out?

ANGELA: Some of the big surprises that we even find ourselves as we interact with advisors is, “Not everything is as it seems on the surface.”  Be sure to go a few layers deeper.  And if the advisor themselves is not able to perform their due diligence, find a partner or a third party or someone who can help navigate through those selections.

[00:06:00] Many times, they may hear from a coworker or a colleague or some professional in their industry.  It could even be a client that comes to them and says, “Did you consider this” or “Did you look at this tool?  Did you think about this resource?”

And when advisors are going through that process, it doesn’t actually have to be all that difficult.  But what they may find is, on the surface, it sounds great but then as they go a little deeper, it really doesn’t fit their business model.  And it’s going to entail a lot more work or maybe connecting those dots a little bit more than they had expected.

Especially when you think about integrations between your custodian and technology and your service provider, if those aren’t inherently part of that process then it could become more work involved and that might be a surprise.

I think there’s sometimes an assumption that all those pieces fit together and it’s better for the advisor to know that upfront before they make some

JOHN: Sure.  Thanks, Angela.  That’s helpful.  And as we said, you know, advisors don’t want big surprises, although there’s always going to be something that was unaccounted for during this type of a process.

So let’s take it a little further.  In terms of best practices, what should advisors be looking for broadly when it comes to seeking the partnership that’s going to best be able to serve their clients as they come across to the independent channel?

ANGELA: [00:08:00] Yeah, that’s a great question, John.  So I would advise them to do their homework and only compromise if it makes sense.  So whether it be the aspect of the technology, the service or the cost… In some cases, cost is the variable within this decision-making process.

But operation sits at the heart of the business.  This allows you to onboard clients, service clients, make investment recommendations.  Sometimes, it might be a client needs cash or a client needs a new product or a service.  Are all of those functionalities going to be available?

And if you don’t have a good span of what your business requires, including what your underlying clients may need and you make that compromise, you actually might be creating a poor experience that otherwise you wouldn’t have made that selection in the very beginning.  So it’s really important to do that homework.

Other best practices that we try to help is, is it a good cultural fit?  So what do I mean by “Cultural fit”?  Operations really should be a partner and it should be an experience where the advisor or the team supporting the advisor and the clients feels like they’re being heard and that as they develop ideas or run into a situation to escalate, there’s a cultural service component that that sense of urgency and specificity can be addressed.

If in fact there isn’t a good cultural component, that actually could seep through to the client and the client may then question, “Why did the advisor go with this service provider to begin with” because that’s not actually helping them fulfill their needs.

And I would say at the very end, there’s a value proposition.  So if in fact you have a bad service component, the service is poor, the technology is limited, at what stage does the client come to you and say, “You’ve made this choice but it’s not impacting me to a point where I feel like I need to search elsewhere.”

[00:10:00] And if a client chooses to search elsewhere then you might be forced to make a decision around making a choice in a very short order to try to retain clients.  So should check all the boxes over the long haul.

JOHN: [00:12:00] Terrific insights, Angela.  And thanks for your time today.  We really appreciate it.  — On our next episode, we will focus on investments and we will feature Dynasty’s senior vice president of investments, Nick Gerace.

ANGELA: Thank you, John.

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