Why firm is contemplating 'subscription' model for younger clients
Rob Knight loves being a visionary – especially now that he has a new hire who ensures that his best ideas are integrated with his growing firm.
“We hired a head of strategic initiatives from another industry late last fall, and she is an absolute rock star who is galvanizing our team and leading them, and continuing to push forward,” Knight, who is the managing director and senior investment advisor for Steward Group with iA Private Wealth in Cambridge, Ontario, told Wealth Professional.
“We both did the visionary integrator model. I’m about as far out on the visionary scale as you can get, and she’s about as far out on the integrator scale as you can get. So, we’re a very, very good combination. That’s exceptional!”
Knight, based in southern Ontario noted that while he comes up with “16 great ideas that day”, his new colleagues uses her organizational abilities to winnow them to four and rally the team to implement them.
“So, I can spend my time doing Rob-type things, which is the visionary thinking, seeing some clientele, and training and leading the advisory team to get better and bigger,” he said.
Knight has been watching the U.S. financial advisors’ landscape and tailoring how he develops his team to deliver financial advice in order to serve more clients seeking advice in these volatile times.
“No one wakes up one morning and says, ‘gee, I need a financial plan today,’” he said. “Instead, they have a financial question, and they need an answer. It’s really hard to Google and get a perspective. So, we’re there to provide the perspective and the advice. Our business is doubling down on our ability to deliver advice.
“My leadership team is mapping out what we think our head count is going to be and one of our key hires is going to be a director of planning. So, we’re pushing forward. We’re not slowing down.”
Knight noted that his firm has evolved over the past few years. It would traditionally have been called a solo, or small team, advisory firm. Now, he said that it’s moving toward being an ensemble firm, where it has a number of professionals who can cross-service clients. It no longer has individual advisors with books of clients. The firm now has the clients and the advisors service those.
The Steward Group is also developing a clear career path for both advisory and operational staff, units that they the firm runs separately so they don’t include a lot of cross-training.
“If we bring in a young associate advisor, our goal is to get that associate advisor trained very quickly to be in a position to be able to provide advice to clients,” said Knight, noting that these advisors will need some training, guidance, and training to keep moving up as opposed to the industry standard for associate advisors, which is continuing to work on paperwork behind the scenes.”
Knight has been growing a team of young, as well as more experienced, advisors. The Steward Group now has nine staff – five licensed advisors and four operational – to serve 270 households and $140 million assets under management.
Knight is also contemplating bringing in a “subscription” fee model, which could appeal to younger clients who don’t have as many assets to manage. It is working with its dealer on how to provide that, especially since it does not have an asset threshold for potential clients.
“An increased need for planning requires more time,” said Knight. “So, if we’re going to work with young professionals who are just coming out of school and may have a negative net worth, but still need advice, they may be willing to pay for it because the world works on a payment system.
“When you buy a $50,000 car, no one knows it’s $50,000. It’s $600 a month to them, so we think: ‘why can’t financial advice be offered the same way?’ If a young professional doesn’t have any assets yet, maybe they can pay $250 a month. We can do a lot of really good work for $250 a month. Once they acquire some assets over time, we can transition them to an AUM model, but we don’t as long as we’re getting our costs covered and have an appropriate profit margin.”
Knight believes this is a model that may work for more people currently not getting financial advice because they don’t feel they have enough assets. He thinks it could also supplant the branch style of advice where clients don’t get the opportunity to build a relationship or any continuity with advisors.
In the meantime, he’s spending a lot of his time mentoring.
“I think that’s one of the most valuable things that I can offer my team,” said Knight, “because there’s an ever-increasing need for advice but a decreasing ability for the people who need the advice to get good advice providers. That’s the real challenge facing all of us.”