Soundtrack to a Financial Advisor's Life – Trey Prescott Discusses Advisory Services Network and Working with Independent Firms
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Trey Prescott, Director of Business Development discusses the Advisory Services Network, Independent Firms, and Recruiting a variety of financial industry professionals to Advisory Services Network plug and play platform.
Trevor Chambers:
Hey everybody, this is Trevor Chambers, with Olde Raleigh Financial Group, and Meet the Masters. Today, we continue our discussions with people who work within the registered independent advisor industry. And today, we have the pleasure of having Director of Business Development for Atlanta area based advisory services network, Mr. Trey Prescott. Trey, how are you doing today, man?
Trey Prescott:
I’m doing fantastic. I appreciate you guys having me on.
Trevor Chambers:
No problem. We know each other quite a bit. About jeeze, coming up on three years, and I know that you work with your dad Tom, who co-founded ASN, and I just wanted to talk to you today, because I want to get your perspective. You do business development, so you bring people on board to ASN and the platforms you developed. I just wanted to hear, what does ASN do for advisors. What’s your pitch, and then we can just talk about other things, but I want to start there. Why work with ASN, and why move to that type of regulatory platform?
Trey Prescott:
Loaded question.
Trevor Chambers:
Yes, of course.
Trey Prescott:
It really depends on who you are, what you’re doing, but more importantly, where you want to go in this business. We come from a very different space. I begrudgingly joined ASN straight out of college and-
Trevor Chambers:
Begrudgingly?
Trey Prescott:
Just listen. If you grew up in a house with Tom Prescott… compliance consultant, you would understand begrudgingly.
Trevor Chambers:
I got it.
Trey Prescott:
I had a rare opportunity. Whenever I would get done with a practice, or a sports team or something, I generally went to my dad’s offices.
Trevor Chambers:
Right.
Trey Prescott:
law offices, and he had the kind of guys that were smoking a pack of cigarettes in the basement office.
Trevor Chambers:
Right.
Trey Prescott:
It was very interesting to see, but I got to see the world that I’d be jumping into a long time ago. It is very competitive, and it’s always evolving, and I’ve been able to see that with Tom, and especially his partners, our other founding manager, Dave Paulukaitis. But, ASN had a father and mother firm called Mainstay Capital Markets Consultants that built financial institutions, helped advisors go independent, built RIAs broker dealers, and finally, we were building a bunch of independent firms for custodians like Fidelity Investments, and we had a number of advisors say, Tom, Trey, we love the firm that you built.
We love how you built it. We don’t want to run this thing, we don’t know how to run this thing, all we care about is owning our brand, clients, and data, and working with partners that really help our business on the back office. So we came from a different niche than most people do in this business. A lot are taken up be present equity, and things of that sort, but we wanted to come from a different realm. We had through Fidelity, probably five to ten advisors in the 25 to 100 million dollar range that really wanted to scale, join together, and not deal with all the day to day minutia of that RIA, and running that business.
So we decided to create our own independent platform, which I got into the business development role after I did five years on the operations team, and I really took the position with it that, I’m helping people not only launch their own businesses outside the wires of the Merrill Lynches, The Morgan Stanleys, the UBSes, people leaving the broker dealer mentality and coming on the more independent side. We get people to join our firm, but we’re also enabling people to be able to run their own firm and control their own investing, because when they come over to ASN, I think they see a different type of transparency, especially with myself and my dad Tom Prescott.
He’s our founding managing member here, but also with the staff that we have here. We’re very high touch, we’re very human to human type contact, there are no queues here so, we have taken this as not only an independent platform that we really believe in, but also we think that we’re bringing a hell of a platform, but a different type of support model, more high touch model where we’re literally in it as a transparent partner. We’re able to bring four custodians.
There’s one free private banking options, verse one, and advisor type of choice. It’s who they want to work with, how they want to work with, and if they want to use everything in the package, god bless, if they don’t, they don’t. So, it’s been great to see for legal, all this evolution over the past 10 years, but I’m seeing right now, when ASN first got started, we had some data that was really interesting.
From 2005 to 2010, our Mainstay Consulting models got business changed from building 100 percent broker dealers to 100 RIAs in a five year span, and that’s a draft expand to be making. And in that time since then, broker dealer model has really gone down from 7000 [BDs 00:05:08] in the country, to about 3500. We see RIA popping up everywhere.
Trevor Chambers:
And how long a time period are you talking about, 10 years?
Trey Prescott:
Five years on the broker dealer RIA side for Mainstay, but versus now and how many broker dealers have gone away, been bought, closed, all of that type of stuff, versus RIAs, it’s incredible to see. And I was seeing it, whether they got that independent route with Schwab, or they want to launch a firm with Fidelity, there are more and more advisors looking over on the other side of the mountain saying that grass really is greener, how do I get there?
And my job is to not only educate them on how to get there, but to work with them and their timelines, because yes I am in sales, and yes I do want to get a deal done right when I have that call, but I’ve had a group closed in literally 17 minutes where they’ve asked me to send the paperwork [pre high 00:06:00] and all that kind of stuff. I’ve also worked with groups for three years before they’ve signed with us. So-
Trevor Chambers:
So, let’s talk about that. Let’s unpack that if you don’t mind me interrupting.
Trey Prescott:
No-
Trevor Chambers:
Because I asked Tom this question, and I’d love to explore it through your point of view. The guys that are taking three years, the people that are taking three years, excuse me ladies. The people that are taking three years on the advice, what’s the hangup? And also, is there a couple common trigger points where they just say, okay, that’s it. There’s some commonalities there.
Trey Prescott:
One, a huge paycheck that they usually take going from wire to wire, broker dealer, broker dealer. It is not surprising to have a 50 million dollar advisor three to four hundred thousand in debt when they’re trying to leave a firm such as a Wells or a Merrill or a Morgan. It’s pretty incredible how much bigger groups and the bigger companies are willing to pay out just to go from debt to debt deal, but also there’s a lot of due diligence that needs to be brought into this.
Trey Prescott:
When you do something for 20 years, and you’re looking at something different to do the next 20 years, you really need to dig into what the offerings are out there, and what you’re getting into, and it takes time. It takes some people more time than others, but for instance, during this Covid situation, I genuinely am on calls from nine to five, but whether it’s a wholesaler from JP, or a new advisor introduction from Fidelity, or someone I’ve been catching up with after two years because I cold called them two years ago.
But a lot of advisors are taking this as an opportunity whether they’re 25, 250 million, or we had a few billion dollar practices we’re talking to right now, what that little relationship would look like, but they are really calling around all the custodians, all the Diamond consultant types, just saying hey, what’s out there. Who are the best partners, and who is going to bring me the most cost competitive model for me to run my business off of.
So people are out there, don’t quote me on this, but you possibly can, and we’ll see going into 2021, there’s a major bank that’s always in the news. They’re expecting to lose between three and five thousand reps this year. How they come to being comfortable with that is beyond me, just because it’s going to be such a windfall, but here in the Atlanta area, I’ve got 10 of those reps, and one of them has already joined us right now, and they’re saying, “Trey, it’s about to be a landslide for all of them.”
Because people are waking up to saying that they don’t need to deal with those branch managers anymore. Kumbayah conferences and all that stuff. They can go find partners that will serve their needs, talk to them as they need, but also bring that value to them that makes their business thrive so they can do what they do best. Focus on the clients and the hunting and gathering of their clients.
Trevor Chambers:
So let’s talk about the clients. The end retail client, your clients you’re serving. What does moving to that world do for the end client?
Trey Prescott:
Do for the end client, it depends. The end client has a different view than our client who is the advisor. And, they’ve got to get used to going from a Wells Fargo type technology to a Fidelity Wealthscape, or a Merrill Lynch edge system, to a NetX 360 on Pershing. So, there’s a change of platforms that they have to deal with, but the overall service level in my view is better, because there will never be a queue again. There’s always a human, and even if that advisor goes away out of the country, we have multiple shops with ASN.
Some of them live in Jerusalem for eight months out of the year. Some live in Switzerland, some live in the Bahamas. If those clients can’t reach that advisor, they can call into our 1-800 number and get to their client service manager who works with that advisor, we can get that done here.
So, what I tell those advisors to say is, look, we’ve been in the wirehouse bank, broker dealer mentality for a long time. I’m taking it upon myself, the advisor, to go independent, create my own firm, I’m filling all the back office and aligning my independence with a firm called Advisory Services Network, but all of your money is going to be located in either a Fidelity, or a Schwab, or a TD, or a Pershing, which are all national and world names that they’re comfortable with.
So it’s really about working with the advisor on the script and the how to present this to the client, because in reality, they’re just creating their own firm and then aligning with another firm to take care of all that back office. But there’s so many different ways to skin the cat, that it can be lost in translation. So as long as the advisor understands the world that they’re changing to, I’ve seen it be a very good conversation. Without a whole lot of client disruption.
Trevor Chambers:
And the attrition, in other words, if you move from fill in the blank, Wells Fargo, to an RIA platform, there is a fear that you’re going to lose people. I would think that any time you transition, you might lose people, but in fact, it was our experience that we actually gained more people right off the bat. We gained more, not lost. Do you have any thoughts on that? In other words, they’re going to follow you right? So if you leave, there’s a good chance they’re going to follow you, or is that not really a fear out there?
Trey Prescott:
Who wouldn’t want to be in business with Alex and Trevor [crosstalk 00:11:32]
Trevor Chambers:
Well of course, there’s that. I mean, we’re just lovable guys. But [crosstalk 00:11:37]
Trey Prescott:
Relationship is what it comes down to.
Trevor Chambers:
Yeah.
Trey Prescott:
And when advisors come to me and say, “Trey, I can’t risk losing 50 percent of my business.” I then tell that advisor, look, it’s not your time to do things. You need to take six months, eight months, a year, and you really need to solidify this client relationships.
Because if you’re a high touch advisor and you talk to your clients and you do right by your clients, they’re going to know that, and if they get a random Joe Schmo from the wires calling you saying, “Hey, so and so has left, done A, B, C, and D, but we still want your business, that client’s ears are going to ring up and say, “Why is this guy calling me right now? Why haven’t I talked to my other advisor?”
I’m experiencing it right now in two transitions I’m dealing with, and it’s fascinating what contract firms are saying about them. But, all I tell the advisors look, focus on you, focus on your client, your paperwork, and everything will work out in the end. Do not let all the outside noise which is what they want, those intimidating letters that they send, or the crank call team that they get to call their clients, don’t let that outside noise get you off of your saddle, because that’s exactly what they want.
So, if your client relationships are good, you’re not going to have any issue, and you should probably expect a few referrals to come your way. If 50 to 75 percent of the book comes with you, you still got a year, two years, three years, to go get those clients back. So it’s not the end of the world depending on what your [AUN 00:12:57] base is, but also how confident you are in yourself.
Trevor Chambers:
Yeah, and if you’re more on the early or mid timeline of your career, I would think that considering this channel of operations makes a lot of sense, especially particularly if you’re in the early or mid. But let’s talk about the people that might be in the final say decade or five years. Do you talk to a lot of those people? Who’s your classic client?
Trey Prescott:
My classic client, generally someone between 35 and 55 evaluating what they want their next 10 to 20 years to be. And the reason why I say that is, Wall Street, you can go back and ask my dad, Tom, it’s a lifelong business. Guys like him will die in their chairs. They will tell you that with a smile on their face, because they really enjoy what they do.
What advisors are really looking for in my point of view is the number one, they can get a succession plan in place, two approved proverbial hit by the bus plan, but also they want to grow with a partner that’s not going to kill them on the day to day pricing, admin costs, compliance costs, administrative fees. People want a A to B type offering, meaning you see the all inclusive offering, there’s not 15 different other ancillary charges after that, when a 90 percent payout gets down to a 70 or 65 percent pay off.
Those days are slowly but surely ending, and I think a lot of the larger firms understand that, and there’s a reason why they’re increasing these pay outs to buy advisors books over, and to sink their teeth into it. ASN, we don’t do equity plays here. Everyone that comes to join ASN is a warm call in a relationship that’s developed over a long period of time.
Do I lose a bunch of deals because I’m not willing to write an up front check, yeah. But I guarantee those groups are going to be back in the market in the next two to five years, because they’re just going back in the same swimming pool they’ve been in for so long, and then they’ll see their other counterparts really enjoying the independent side. So, it just depends on the type of bear that I’m dealing with that day. But generally, 35 to 55 really try to evaluate where they want to take their business for the next 15 to 20.
Trevor Chambers:
And also, along those lines, you’ve got to consider not only where do you want to take your business, but let’s say you have five years left, seven years left in your career. Okay, within that last decade. You got to only consider, okay where are you taking the business, but where are you taking your clients? Because do you want to keep them in that broker dealer environment, or do you want to bring them out into the light of transparency?
Because I think one of the things that’s just awesome about this type of business is the transparency and the reporting. I don’t know if you want to talk to that, but I think that’s absolutely crucial, and technology. Which in other words, you can get access to best in class technology, whereas opposed to being railroaded into using whatever technology X, Y, Z bank thinks is appropriate. Let’s talk about transparency, and then let’s talk about that a little bit.
Trey Prescott:
Yeah. There’s a lot of advisors out there, the compliance end of things is a bear, and it’s a bear because there are certain things that they know to be true, cannot be true at all, and on the compliance end on the fiduciary and the independent side, versus the broker dealer wirehouse side are completely different worlds. Here the only thing for us is we want numbers to be [DIV 00:16:49] certified, three years type track record, but there are also firms on the broker dealer side where it’s pump and dump sales mentality, try to get 20 people in.
Get five different conversations going and one to each client, and to try to put them into some type of annuity or insurance product and lock them in. So, it’s a different type of product, different type of feel, and the technology, ASN in our case, we took a different mentality as to technology. We, like you said, wanted best of breed, not proprietary. You have people, it’s amazing to go on LinkedIn and see how many people are just clearly pumping up their technology that they’ve worked on for five years.
Next year, that technology is going to be so outdated it’s not going to keep up with the TD Veo One, the Fidelity Wealthscapes, the NetX 360s or the Charles Schwab platform. So, every two years, two weeks of tech rendering. We bring in the Black Diamonds, the Orions, the Morning Stars, the CRMs from Sales Force to Red Tail. We really go and do a deep dive into who’s out there, who is best in breed, and who will our advisors get he most out of. And you’re about to get an email from me right after this, I wanted to take a break from the ASN partner value calls, because I didn’t want to fill up their inboxes any more than they were already being filled up and fill up your schedules.
It was a stressful enough time. But, ASN for instance, we have JP Morgan knocking on our doors, we have America Funds Capital Group, Goldman Sachs, Fidelity, all of these groups want to get in front of our advisors, but this is where it’s funny. When the trade [inaudible 00:18:26] from advisory services knows, so they call them and say, “Trey, thank you for doing A, B, C, and D. How can we do more business with you?” And I’m like, “Well, let me go check and see who needs the business.”
And then I’ll put those people into contact, so we’re a blanket in front of those advisors so they don’t get cold calls all the time. But, on that note, from here on out, ASN advisors will have the opportunity to pick what money manager they want to work with, what firms they want to be associated with, and it’s not going to be just one funnel of a Merrill Lynch product, or a Wells Fargo banking product anymore. They can choose from all these different partnerships. If you want Fidelity Wealthscape, you’ve got thousands of different money managers when you only had 50 to 100 from your previous firm that you had to use those, because the firm made money on it.
We don’t have the pay out, we don’t do money management here, and we’re not really interested in it, so we think it’s a benefit and value add that we can put all these calls together and let the advisors choose who they want to talk to, and who they don’t want to talk to. Do I get some angry calls from them saying, “Trey, you’re pushing products. You’re doing this, you’re doing that.” Yeah. But once I pick up the phone and talk to those advisors about what I’m actually doing, they don’t have a whole lot of say, because I don’t get anything from this.
So, what we are wanting to do, attempting to do, and doing so right now is, we’re putting together a list of right now I’ve got 75 different partners who want to bring the research calls to us right now, and I’ll end up sending 75 different weekly calls from here on out. But, the last three, four months, it was a stressful time, it was a crazy time, and I really wanted to respect advisor’s privacy at that point, so I have some advisors that are probably mad at me about that, yeah, but they’ll get over it. I wanted to respect as much time as people had, because this last three, four months is something we’ve never seen before.
Trevor Chambers:
Yeah. Well, one other point that I’d like to make about clients, and running this way. We’ve been developing a lot of content here that we broadcast on the site through a blog, and podcast. And when you’re working for a big wirehouse, you’re basically again going back to you channeled into the content that they put out, or approve, which is very constrictive.
But working on this side, it’s great because we have a little more latitude. Still not nothing out of line, but a little more latitude, and that’s really important in this day and age when it comes to marketing, because you’ve got to really develop your voice out there with original content. And it’s hard to do when you’re on the other side, and that’s an aspect that I think is going to increasingly become more and more important to just get eyeballs on your brand. So, that’s one thing I just wanted to mention to you.
Trey Prescott:
In my opinion, and you can correct me here just because you get to do it more every day, is that I feel like ASN for instance, there’s a compliance department that’s working with you, not against you.
Trevor Chambers:
Yeah.
And I think that’s very apparent on a lot of the independent side in the landscape. Because I will hear from certain wirehouses that I got X runningback from a top SEC team that’s bringing his business over at some point, and it took him almost three months to get an article approved just to go on a recruiting website. It wasn’t a recruiting website for advisors or anything like that, it was a recruiting website for a 237, just talking on his career path and all that type of stuff.
So, we feel that the compliance then is not some draconian you have to do this, push ASN products, A, B, C, and D. We have a group that approves podcasts, we have advisor that go on CNBC, nationally syndicated radio shows. We have gun nights, poker nights, quail hunts. You name it, we generally have it here. But you’ve also got the backing of a compliance department that really knows and is integrated with those FINRAs and the SEC.
Our partner Dave Paulukaitis was a director of FINRA former NASD for 25 years. So, we have a whole different mindset and view into that, that we can work with the advisor and say look, instead of saying this this way, how about you use either A, B, C, and D here to really get your message across, but also keep you out of the hairs of the SEC and FINRA for instance.
Trevor Chambers:
Yep, yeah it’s huge.
Trey Prescott:
Depending on which side you’re on.
Trevor Chambers:
Right. Well, in conclusion, I think we’ve covered a lot. Is there anything last words from Trey Prescott?
Trey Prescott:
Look, if you’re sitting there saying I’ve been at Merrill, I’ve been at Morgan, I’ve been at all these places for years, what does the other side look like? Pick up the phone. Whether it’s to Trey Prescott at ASN, to Louis Diamond at Diamond Consultants, or even the Steve Peters or the [Noel Gladens 00:23:20] over at Fidelity Investments.
Pick up the phone, start your research, and then I guarantee you, you’ll get more from that research than you ever did on most of the calls that you reach out to. So, give yourself the opportunity to learn more of the landscape and educate yourself, and you’re going to find yourself in a good spot.
Trevor Chambers:
Perfect, well thanks for the time. We’ll conclude here, and I appreciate your time Trey, I really do.
Trey Prescott:
No, I appreciate you guys having us on, and I wish for the best, and hopefully a calmer 2020 for the rest of the year.
Trey Prescott:
All right, bye.