Ron Carson: Stop using the word 'fee'

Compensation, cryptocurrencies, diversity and environmental, social and governance investing were the main topics during an Industry Powerhouse Panel at Carson Group’s Excell 2021 conference in Las Vegas on Wednesday.

Here are the nine top takeaways from the session:

1. Stop using the term “fee.”

“I would challenge everybody to get rid of the term ‘fee,’” Ron Carson, Carson Group CEO and founder, told attendees and those watching virtually.

“Who wants to pay a fee? I mean no one likes fees but we’re all willing to make an investment in our future,” he said.

Carson explained that he tells new clients who may see Carson as more expensive than other firms: “No, we’re the best value ever. And, if at the end of three years, you’re thinking in terms of a fee you’re paying me, we have not done our job.”

2. Advisors who don’t scale their businesses risk falling behind.

“We’re all privileged to be in a growing business,” according to David Canter, executive vice president and head of the RIA segment at Fidelity Institutional.

There are about 14,000 RIAs registered with the Securities and Exchange Commission, he said, noting that doesn’t even include the number of RIAs with less than $100 million in assets under management who are registered with U.S. states. “That number continues to grow so there’s, as I like to say, a bull market for advice.”

Noting that most advisors are paid on an AUM basis, with a growing number providing financial planning on an “a la carte” basis, he said: “Advisors must “provide more and more value for our clients.”

However, “if you don’t have” the scale of a platform like Carson Group’s, “whether embedded within your own business or” provided by a partner, “it’s harder and harder to provide those services and value,” he said.

3. There is a growing shift to “holistic” planning.

“One of the biggest shifts that we’ve been seeing is this move to holistic planning: providing services above and beyond investment management,” according to Suzanne Siracuse, founder and CEO of Suzanne Siracuse Consulting Services.

However, “how do you charge for something like that when it doesn’t tie back to the assets that you’re managing?” she said, calling that the “$50 million question.”

4. The move to flat fees is accelerating.

“The trend that I’m definitely seeing is moving [to] fee for service — so a flat-fee model,” Siracuse noted.

“Another really interesting model, in my opinion, is like what Facet Wealth is doing, which is a subscription-based model” in which you pay a flat fee each month and can cancel anytime, she said.

Under that model, advisors will help you with particular tasks, she noted, explaining: “What that does is it really helps clients that maybe can’t afford a financial advisor … but it gets them acclimated to what advice can do. And I think that is a huge game changer.”

5. It’s important to figure out the best fee model for younger clients.

There are about $8 trillion in assets that will change hands to a new generation over the next 10 years, Jacqueline Campbell, president, CEO and senior wealth advisor at Alexander Legacy Wealth Private Wealth Management, said.

“As we’re delivering value, how [we’re] delivering it to this next audience” of clients is important to consider, she noted. “That’s something that we’re thinking about a lot at Alexander Legacy” because how to deliver value to current clients “could be very different” than how to deliver value to the next generation, she explained. “How we explain fees and how we’re compensated might look very different” also, she added.

6. The advice business needs to be more open to women and minorities.

“Our profession is dramatically underrepresented” among women and minorities despite efforts to improve diversity and inclusion, according to Carson, who conceded “we’ve never represented” those segments of the population very well in the advice business.

“We want to expose more young people [including] more young people of color to this profession,” Campbell said.

7. Improving diversity makes a business better.

“Intentionality” is important, according to Canter. Improving diversity in the sector “fosters better business,” he said.

“It starts with the mindset [that] you’re doing it not just because it’s the right thing to do,” according to Phil Loughlin, a managing director at Bain Capital. “You’re doing it because it makes businesses better,” he said. “You’re bringing in more talent and more perspectives. You’re drawing from a broader pool and it is better.”

However, Loughlin added: “It’s hard and you can’t just flick a switch and do it overnight.”

Agreeing that improving diversity “makes good business sense,” Siracuse added: it is “really important for moving forward and growing your practice.” The next generation of investors are “going to want to know that your firm supports that and that they can identify with people that are at your firm that are giving them the advice,” she said.

8. Consider changing the language in job listings.

When posting a help wanted ad, it is important to “think about the language you’re using and the messaging that you’re using – even your job descriptions,” according to Siracuse. “A lot of times we have found that they’re written specifically for white men.”

She also suggested including underrepresented groups at one’s firm in the hiring process, adding: These are just “practical things that we have seen or I have seen over the years actually be able to move the needle and make a difference.”

9. Investors are increasingly looking for crypto and ESG.

Noting that environmental, social and governance focused investing is a “huge priority” at Fidelity, Canter said: “Investors are looking for it.” He predicted: “We’re all going to be asked about our ESG principles.”

Pointing to a recent survey of 400 advisors, Siracuse said crypto is the top investment strategy that clients are asking advisors about, followed by ESG. Sixty percent of next-gen investors are asking about crypto and 45% are asking about ESG, she added.

Siracuse predicted that crypto is “absolutely not going anywhere.”