About Advice Only

We all see it: the financial advice industry is completely broken right now.

Let's look at some of the ways we've been collectively dysfunctional:

• Low trust by consumers despite quickly-growing interest in "real" financial planning
• Blatant conflicts of interest inherent to the most common business models; adding to the confusion, dual registration structures / "switching hats" & lack of title protection
• Effects of racism & sexism on both advisors & clients
• Too few young people entering the profession & too many failing out early; of those who "succeed," many feel stuck — genuinely desiring to improve clients' lives but incentivized by employers who do not always prioritize clients' interests above their own
• Abhorrent failure rates for new financial advisors, particularly when initially placed into sales positions rather than paraplanner or support roles under more experienced advisors
• Fee-only AUM firms are a step in the right direction in terms of consumer transparency and aligning business models with fiduciary obligations, but they still have major problems — significant conflicts of interest in the advice given, poor understanding by clients of what they're paying, the inability to serve younger or lower net worth clients without $1m+ to manage, the mismatch between what we charge for (investment management) and the main value we provide (financial planning), and the unpredictability of firm revenue with market volatility
• A false belief that consumers without millions of dollars to invest either don't need financial planning services or can't be served profitably
• Advisors at most firms finding it tough to choose a client niche & service model that works for them
• Many advisors starting their own RIAs (easier than ever thanks to modern tech tools and supportive peer communities) in order to work with clients under business models they believe best, only to feel stuck in their own firm trying to balance the dual roles of business owner & financial planner
• Significant cash flow challenges during early growth for small firms genuinely trying to do right by both clients and employees; pressure to take outside investments or loans to grow
• Advice-only solo advisors experiencing difficulty hitting reasonable profit margins when they grow to be small ensemble firms
• Shockingly fractured and ever-changing regulatory structures across various parts of financial services, confusing both the public and those who work in the industry
• Product-focused firms attempting to shift their business models but fumbling the process
• Succession planning & continuity planning remaining major challenges for several approaches, particularly solo RIAs

The current tangled landscape of financial advice

There are many different places offering financial advice, but consumers are often not equipped to evaluate their options. Some examples include:

• Wirehouses
• Banks and credit unions, whether providing advisory services directly or partnering with others who advise
• Insurance companies
• Independent broker-dealers
• Ensemble-style RIAs
• Solo RIAs
• PE-backed aggregators buying every RIA in sight to utilize economies of scale
• Custodians / brokerage firms offering limited financial / investment advice
• Online "robo advisors" managing investments that may or may not offer broader financial advice
• Employer-focused firms providing planning services or financial education as an employee benefit
• Nonprofit organizations offering financial literacy & education
• Friends & family
• Self-education resources (blogs, podcasts, courses, books)
• Online discussion communities (e.g., Bogleheads, r/personalfinance)

The end result is that things aren't working well for either advisors or their clients. So what might something closer to the "perfect" advisory firm look like?

We imagine a place where:

• Interests of clients, advisors, and the firm are all fully aligned so there's minimal conflict
• Service models to clients are both wide and deep
• Advice is given by highly qualified professionals with relevant education and credentials
• A demographically diverse range of clients is served
• Equal opportunities exist for all advisors regardless of race, gender, sexuality, etc.; all feel welcome, supported, and valued
• Workforce culture is strong; everyone is proud to say they're part of the team
• The firm benefits from healthy margins; consistent, predictable profitability regardless of stock market prices
• Advisors keep the vast majority of revenue — seeing as they're the ones with primary responsibility for serving clients
• Advisors can focus 99% of their time on clients, not on running a small business
• Advisors can use investment models and financial products from anywhere depending on the actual needs of the end client
• A predetermined and tested succession plan is in place for every advisor on the platform
• Compliance obligations are managed as simply as possible within fragmented regulatory structures

A potential solution

It's time to build an advisor platform that focuses on serving advisors who want to go advice-only. This approach:

• Frees financial advisors to give advice on a wider range of topics, with an open mind and clear conscience
• Removes the blatant and significant conflicts of interest inherently created by selling investment and insurance products for commissions
• Removes the less obvious but still significant conflicts of the AUM model
• Is absolutely economically feasible
• Easily attracts more clients

We provide the RIA structure instead of advisors having to set up their own. SEC-registered. Allows advisors to continue to own their business and their clients 100%. Allows advisors to serve whatever types of clients they want to, using a service model that they as professionals think is best for that client group. Allows advisors to keep 100% of the revenue collected from clients.

Elevating from a "movement" to a REVOLUTION

For over 10 years now, XY Planning Network has asked us to help "grow the movement" of fee-for-service financial planning for the next generation of clients. This same spirit of change has long been embodied in other organizations like NAPFA, the Garrett Planning Network, and many others with both their hearts and brains in the right place. Even though we've collectively made significant progress toward transparency and building a real profession, it's clear that none of the existing major players have gone far enough and there's still a long road ahead.

This is going to take courage, hard work, and steadfast resolve to stand up for what's right. It's time to shift our thinking and our actions from "sparking a movement" to "igniting a revolution." This mission is too important to fail, and right now we are undoubtedly failing. So the question to ask ourselves now is: what are we going to do about it?