When it comes to adapting to FinTech and other challenges, partnering with a well-capitalized, technologically savvy firm like Wentworth can provide independent RIAs with the resources needed to stay competitive, compliant and relatively independent.

It’s hard to think of a time when independent RIAs faced more challenges.

FinTech is ushering in sweeping changes and providing ever-increasing options for the way consumers manage their assets and retirement planning. Whether it’s rising penetration of robo-advisors or growing demands for conflict-free interest, the asset management business is undergoing a period of unprecedented disruption.

There is also a trend toward decentralized services, such as banking and asset ownership, which means more people are turning away from traditional (centralized) wealth management and investment firms.

When you add artificial intelligence (AI) and blockchain technology to the picture, you have a recipe that could squeeze out many small to mid-sized investment firms. With this much disruption, even major Wall Street firms are at risk of falling out of sync with investors.

All of these challenges mean RIAs need to be aggressive in developing solutions that will allow them to compete and thrive. This is where wealth management partnerships come into play.

“Scale is the only way for any advisor or financial services firm to survive in the technological renaissance that is underway in the fin-tech industry,” notes Wentworth CEO Ryan Morfin. “The digitalization of operational work-flows, the focus on high-end mobile user experiences, the automation of compliance frameworks are all trends becoming reality today. Meanwhile, we are seeing continual, substantial fee compression.”

Wentworth was created specifically to acquire middle-market broker dealers and RIA firms and capture economies of scale needed to service financial advisors in today’s technology enabled regulatory environment. We believe this focus will enable us to build a leading wealth management platform for Advisors to continue to call home.

Benefits of partnering with Wentworth

Partnering with Wentworth is a way to pool resources to build something bigger than you might be able to achieve as a completely independent RIA. Some of the benefits of partnering with us include access to:

  • A technology platform that improves service, communication, and efficiency
  • A partner with an owner-operator view of the broker-dealer business, versus a financial engineering approach
  • Capital for exiting or recapitalizing your business, or executing strategic acquisitions
  • An open architecture structure that allows dually registered advisors to continue to execute their commissionable business in order to cover all their clients in their book of business while also allowing independent RIAs to recommend the best funds and investment opportunities for their clients, rather than being limited to the firm’s mutual funds
  • Alternative investment products that may not be available to wirehouse advisors
  • Risk management and compliance resources that enable you to be more proactive in adjusting to regulatory changes and trends, rather than simply reactive

These were among the benefits that convinced the partners of World Equity Group to enter a purchase agreement with Wentworth in December 2018. When consummated, World Equity Group co-founder Bob Yarosz will retire while his partner Rich Babjak will continue as president of the company.

“Maintaining that boutique feel and an entrepreneurial culture all while having a deeper pocket behind us will be very unique to the industry,” Babjak said in announcing the deal. “We have the opportunity to become a destination for advisors seeking to grow their own business.”

Payment and Compensation Structure of RIA Firms

Because Wentworth’s management team has extensive experience owning and operating broker dealers, we understand partner’s concerns about how a sale will affect their compensation. Wentworth believes there is no “one size fits all” system that works in all circumstances. Further, the system you put in place now will most likely change as the firm grows and evolves.

Selecting a compensation scheme not only determines the earning potential of each partner, but lays the foundation for a firm’s values. When done right, it can ensure the long-term stability and profitability of a firm.

2 Payment Structures

Salary based: Partners receive a base compensation or salary. Partners will have a blended role that balances relationship management, business management, and bringing in new business. Salaries can be calculated in different ways. It might be a preset amount, based on the prior year’s revenue, based on other business contributions or a combination of both.

Incentive pay: This type of structure is characterized by variable compensation that is based on hitting or exceeding goals or initiatives, whether it is bringing in new business, revenue growth, business management contributions or some other initiative. The philosophy behind incentive pay is that each partner is motivated to contribute at a higher level in order to receive more compensation.

No matter which compensation model you choose, whether assets are divided evenly or one partner receives a higher percentage, the split should accurately reflect the amount of work put in by each partner. If partners receive the highest percentage they should take on more responsibility for business development and management, client services, building client relationships and contributing to the overall revenue growth.

Due to the relentless push of FinTech, RIAs need to consider partnering as an option and Wentworth is ready, willing and able to help.

Wentworth Management Services LLC was formed in 2016 is to acquire broker dealers and capture economies of scale needed to service financial advisors in today’s technology enabled regulatory environment. Call Wentworth today to see what’s possible.

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