InFocus: CRM2 Insight

New advisor + independent firm = match made in heaven

New advisor + independent firm = match made in heaven

In the wake of the CRM2 implementation, it’d be understandable for any new advisors entering the industry to feel trepidation. There are a lot of negative predictions flying around at the moment and advisors attached to big banks, insurance firms and direct sellers are getting increasingly worried about how their profits are going to be affected. But this is not the view that new advisors should be taking. In fact, those who enter the industry now, unfazed by the negativity surrounding CRM2, have a great opportunity to quickly build a strong client base.

“We believe that today, for the first time in over twenty years, a new advisor who joins an independent firm has the best opportunity to grow their business,” says Tony DeThomasis, President of DeThomas Financial Corp. “It’s hard to teach an old dog new tricks and older advisors may not be prepared to take additional courses and offer additional services and grow their knowledge on tax management or estate planning.”

Older, more experienced advisors are also facing the problem of having to lower their advisory fees. Until now, experienced advisors have been able to lower fund investment fees by choosing more ETF-like index products, but when everyone in the industry has that alternative the advisor will have only one option left: lower their advisory fee in an attempt to remain competitive.

“The newer advisor at the independent firm will have no such major issues as they will have a smaller books of business, so they can go after those bigger accounts in the higher priced investment products and advisory providers,” DeThomasis says. “Plus, they will be in a better position to offer a lower advisory fee and should be more open to get informed about financial planning, income tax and tax management and estate planning.”

DeThomasis advises new advisors to try to work with an investment dealer who has a low cost outlay, so that their advisory fee payouts are not reduced. New advisors should look for an investment dealer who owns their own building, has no outside shareholders and does not have a lot of top heavy layers of management.

“The investment business has not faced these ‘Uber moments’ yet but it will come within the next three to five years,” DeThomasis says. “The new advisors entering the industry today have so much potential to do great things in the industry. Are they ready to take advantage?”

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DeThomas started in 1987 with a single office and four advisors. Today De Thomas manages over $1 Billion of assets with advisors and offices located across Canada. Even though we have grown in size, we continue to manage our business as if it were still a single family office. Each employee and advisor is valued and treated as family, where everyone has the opportunity to contribute and share their ideas.