How Should Advisors Leverage the Continuum of Business Models?  

William C. Van Law III fell into a career of financial planning by tagging along to roommates interview during university and by walking out hired for the job. In his webinar interview, “How Should Advisors Leverage the Continuum of Business Models?”, Van Law explained his father worked in the financial planning industry also. After exploring both technology and the financial planning industry, Van Law decided to pursue a job at Merrill Lynch straight out of university and “never look back.” 

Pathway From Entry to Executive 

Now an executive, Van Law said his pathway to his role was due to “hard work and being open to possibilities.” He advised that others should try to find the best fit for what they’re interested in or for their skill set, “so they go down the path that they feel will be the most rewarding.” He started in the industry as a junior member as a financial planner helping bring new client relationships to the senior advisor. At the age of 25, Van Law flew solo earning his CFP ® designation in 1990, to focus on estate planning and building his business around the subject. 

Van Law later had the opportunity to mentor new advisors and grow the training program, helping him build a career in leadership. Van Law explained that at Merrill Lynch they had a strenuous approach to be hired through a series of interviews, simulation, and role-playing to either be passed, failed, or deferred. “It’s a great lesson in overcoming obstacles,” he said. Van Law then moved to Florida to run his first office. “I thoroughly enjoyed my time as a financial advisor, however, I was just intrigued by the challenge of being able to influence people’s lives from a leadership standpoint and the variety of issues in leadership,” he said. 

Business Models Are Not One Size Fits All 

Van Law explained that there are four types of business models; independent employee business, traditional employee business, business development for independent broker-dealer, and president of RIA custodial business. Regularly, Van Law said he is asked the same question of which model is right? The right answer depends upon circumstances and it’ll change over time, he said. Each model has its pros and cons, so the person must decide what is best for them and their business. 

The Benefits of Mentors and Being a Mentor 

“Mentors can be both opportunistic and something that you actively seek out,” Van Law said. He advised others to be thoughtful with who they build relationships with and to have respect for a mentor’s guidance. Opportunities can appear, but you must be aware of them arising and proactively seeking out relationships, he said.

Technology and Innovation in Financial Planning 

Van Law explained that relationships with clients work the best when you can connect with them in a way that works best for them. Recently, there has been a shift in the impact of business models, especially independent models, said Van Law. “As an independent firm you’re able to pivot more quickly and so some might even argue today that there’s more freedom and flexibility in terms of technology innovation,” he said. FinTech has empowered independent advisors and firms. “Technology really enhances your ability to have an impact on your clients, connect with clients and deliver financial solutions to your clients,” Van Law said. 

Five Most Common Drivers in the Business Model

1. Risk and Responsibility 
2. Freedom and Control
3. Financial Implications
4. Growth Opportunities (through referrals and marketing) 
5. Succession Options 

The Continuum of Business Models?

Van Law explained that each business model progresses differently and the more business, the more risk is taken on. However, a general low to high risk is traditional employee, independent employee, independent contractor, hybrid adviser, and independent RIA.

Freedom and control gradually get greater, said Van Law, “as a business owner you’re taking a business risk but the financial benefit that you gain from greater levels of independence partially is the fact you’re taking on new roles.” You gain greater responsibility for both running and managing the business, but you will get paid for both which is a greater financial benefit.  

However, the biggest benefit according to Van Law is leverage, as the business grows, the expenses don’t grow as rapidly as revenue. “I would encourage any of you that are out there currently in practice and that have grown advisory firms to be thoughtful about the next generation and mentoring the members to have the opportunity,” he said. He believes that it is important to provide mentoring to the next generation of advisors in financial planning and to be aware of the impact. 

How Can Advisors Create Equity Value For Their Practice? 

Van Law has four pieces of advice to create equity value. Firstly, to proactively think about your practice. Secondly, having a key performance initiative and focusing attention on the key important things, “you can’t improve what you don’t measure.” Thirdly, have administrative roles and surround yourself with people who are just as passionate about their roles, “life and business are better for the team.” Lastly, your business will have a higher valuation when it comes to selling if you’re thoughtful about the firm, “create a business that is an awesome business to own.” 

Final Advice

Van Law’s final advice in the webinar was to “be thoughtful so you can come to the right conclusion for you. Recognize it’s the right business model for you.” He also emphasized the importance of relationships and how they create opportunities to have experiences you might not have imagined and continue love and passion for lifelong learning.  

About William C. Van Law III CFP ® :

Bill Van Law is an experienced financial professional with a track record of success. Perhaps most importantly, Bill is known for his commitment and compassion as a leader in business and the community.

A frequent speaker and industry thought leader, Bill has been quoted in numerous publications including, Wealth Management, Think Advisor, Investment News, Research, and On Wall Street. He has spoken and led sessions at many of the top events in the wealth industry including, Barron’s Top Independent Advisors Summits, Tiburon CEO summits, Deals and Deal Makers Summit and Market Counsel. He also leads sessions for Wealth firms of all sizes including strategic planning workshops as well as keynote addresses for corporate events. 

About the Host:

Dr. Chia-Li Chien is a succession program director at Value Growth Institute, a succession consulting practice dedicated to helping business owners increase their firms’ equity value. Before her private consulting practice, she held several senior management positions in Fortune 500 companies. Dr. Chien is a director of the financial planning program at the School of Management at California Lutheran University. Dr. Chien is a frequent speaker about succession and retirement planning at national conferences and has published three award-winning books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®).

About the Author:

Rosie Baker graduated from California Lutheran University with honors and departmental distinction in May 2021. Her Bachelor of Arts degree Communication with an emphasis in PR and Advertising, minor in Creative Writing. In July 2020, she published her first book, Mirrors & Windows: Unlocking a New Framework to Envision Your Success, with New Degree Press.

Dr. Chien interviewed William C. Van Law III, CFP, on “How Should Advisors Leverage the Continuum of Business Models?” on May 04, 2021, at 1:00 pm PST.

Businesses adapt and change over time from the giant Amazon to solo-entrepreneurs around the world. “Change” holds constant in the everyday environment. Why should financial planning practitioners consider changes in their business model? In this session, we will discuss the following questions:

• Why is there no “right” business model for every financial planning practice?
• Why does technology & innovation play a key role in financial planning practice?
• What are the most common five drivers in the business model?
• What is a continuum of business models?
• What should advisors do to create equity value for their practice?

References:

Van Law, B. (2020). A framework for choosing a business model to fit the evolving needs of your business and clients. Journal of Financial Planning, 33(12), 24–26.