White says he’s making this argument to speak to younger advisors and professionals early in their career. While much of the industry may operate within a model where manufacturers own advisory firms in some form or another, he wants those younger advisors to understand the term ‘independent’ as not owned by or in conjunction with the manufacturing of any financial product. He does not believe that the products these owners incentivize are inherently worse than any others, but he says that the incentive structure may see these products unfairly preferred by advisors and result in them being used in situations where they aren’t in the client’s best interests.
“When the information came out about the push within the banks for sales quotas all the ‘independent’ advisors stood up and said ‘that’s why you need independent advice,’” White says. “Stop it. How independent are you? You have the same incentives going on in the majority of the industry that you have going on at the bank branches.”
While White’s point about product has been widely articulated, by him and others, he also makes the point that ownership of the tech stack may compromise independence. Many firms will argue that scale is key to the successful and efficient implementation of technology solutions, but White says that data ownership is crucial to a firm’s claims of independence. If advisors own their data and if the tech is free of cross-marketing functions, it meets his standards of independence. He argues that technology can be adapted to align with the advisor’s idea of what is best for the client, or it can align with corporate goals of product distribution.
Adam Elliot, President & CEO, iA Private Wealth, says that advisors at his firm retain complete ownership of their client relationships and associated data. The transfer of data in an advisor’s move is regulated by Canadian and provincial privacy legislation, which mandates explicit client consent. He claims, too, that his firm has no explicit or implicit incentives to promote any financial products. He says that advisor compensation at iA Private Wealth is solely based on revenue generation and is wholly independent of product selection.
“iA Private Wealth advisors operate as independent business owners, maintaining full ownership over all aspects of their practice – including real estate, staffing, and branding,” Elliot says. “As entrepreneurs, they have the autonomy to build and manage their businesses within an open architecture framework. While iA Financial Group encompasses multiple lines of business, it has long been dedicated exclusively to supporting the independent advisory model.
