After starting in the industry as a financial advisor more than three decades ago, Carolyn Armitage has seen wealth management from many different vantage points.
She's now embarking on a new venture as founder of
Armitage has seen no shortage of shifts in wealth management. Over her career, she has also been a branch manager with First Investors (the forerunner to Foresters Financial,
In an interview with FP Chief Correspondent Tobias Salinger, Armitage discussed the launch of her new firm, the biggest challenges facing the industry, how RIA owners should field interest from potential buyers and what she would change about wealth management.
The following conversation with FP has been lightly edited for length and clarity.
Financial Planning: You've worked for many of the biggest names in wealth management as well as in the M&A advisory world. What led you to launch a consulting firm?
Carolyn Armitage: I have done consulting work on and off for the last decade. At LPL, I did consulting work with the top OSJs that they call large enterprises there, helped many of them launch their RIA. When that program became too successful and they cut back on those services, I did my own consulting, as I'm doing now. I did that thinking that I wanted to partner with somebody else in the industry.
I had chosen Echelon at the time, because [CEO and founder] Dan Sievert and I had the same quality standards that I thought were a nice complement for each other. And I definitely had an interest in the investment banking side of the business. It was one area I hadn't gone into before. And so that was a good run for five years. Then one of my clients, Thrivent Advisor Network, asked me to come in to take their fast launch and improve the foundation and grow it. And, as they had a strategic shift, I took a look at actually a lot of firms. And there were a lot of firms that I looked at an interview with for being a CEO for their organizations.
And I have to tell you, the business is changing. And I am not in this just for the financial rewards. I truly am in it, yes, to make a good living, but more so for the intrinsic rewards. We all know folks in the industry and advisors know clients who have tons of money, more money than they could ever spend. And they're miserable, right?
So I like the balance of the consulting work, in that I am working from my lovely home — my daughter's old bedroom — in a suburb of Los Angeles called Palos Verdes Estates. So I can set my own hours, work with who I want to work with and be a coach, a mentor, a confidant for C-suite executives in the industry helping to improve their organization. And sometimes engagements can be short. Maybe they're only a month. Sometimes it could be a year long. I love the variety of work that consulting provides. And I feel compelled to kind of send that elevator back down and help folks. I can really help shorten their learning curve after 35 years in the industry, from being a financial advisor, being an executive, being a consultant, being an investment banker as a 360 view — that I can share all those insights without any biases. I'm not beholden to any broker-dealer, any RIA, any custodian. It's a really good almost fiduciary-like status with the clients. So I love it. It's only been a week, and it's been a tremendous kickoff with new clients already signed up. I have a stack of contracts that I need to send out this afternoon as well.
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FP: What do you think are most important challenges facing wealth management leaders today?
CA: It's been such a robust marketplace for the last decade or so. Yeah, there's been little hiccups. We had COVID that we had to deal with and some up and down markets. But, for the most part, it's been more than a decade of tremendous growth. While it's great for the financials, emotionally, it's very stressful on financial advisors who have turned into CEOs and are now running larger organizations more than they ever dreamt of. And sometimes that joy gets sucked out of the work from what they started off doing. How they balance all of that is something I've done quite a bit of work with, helping them determine what their sweet spot is, where they should focus and how they can delegate and how to hire the right people to help them and balance them so that they're not burned out, so that they can really enjoy what they do.
I do think that bleeds over into succession planning as well as continuity planning. I've gotten folks who have called that need a continuity plan as well as a succession plan, because of test results and incidents that happen. And that is still a rapidly increasing event in our industry that is not being addressed well enough. It's a very difficult area, and it's fraught with emotional landmines to do — whether it's internal or external — succession planning.
If the first challenge is more strategic work with crushing success, and the second area is succession planning, the third area I would say is — the human capital element.
So many financial advisors start as entrepreneurs. And over time, "I've added people," — and it is not easy to manage people, especially if they haven't been trained for it. So I think helping them put actual human capital systems in place with career paths, which all the new entrants into the industry want a career path. I think it's helpful for the W-2 model advisors as well. So career paths, performance management systems, making sure you're paying fairly — attracting and retaining the right employees for base incentives, equity sharing — how do you put all that together and still be running the rest of your business too? I think definitely the highest expense element on the income statement is the cost of human capital. So more time and attention needs to be devoted there.
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FP: A lot of the wealth management CEOs are probably fielding calls, emails and LinkedIn messages from potential outside investors, but they're trying to make sense of these large offers of capital. How can they best think through the options besides just taking the biggest offer?
CA: I always tell advisors, whether they're my clients or I'm just meeting somebody over cocktails at a conference: Take the call, see what they have to say, keep a spreadsheet of the information, who the firm is, who you talk to, what their offer was. At some point, they may need that or want it. Even if it's way too early, it is good to track that over time, and they may want to tap into that. And I'm a huge advocate for education. Taking those calls, even if they have no intention of selling, is great education for them. And they can actually learn from these other firms, too. They can discover why some of these other firms are being so successful, and some of those practices they may be able to employ in their firm.
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FP: If you could snap your fingers and change two things about the industry, what would they be?
CA: Oh, my goodness, I would love to be king for the day. I would love to snap my fingers and get over the whole best interest versus fiduciary, commission versus fee. I see a place for commissions in our industry. They're there because some of the folks don't have enough money to make it efficient for advisors to serve them. Yet, at the same time, 30 years ago I moved over to the fee-based side of the business and the fiduciary side just is in the client's best interest. And I think it's so divisive in our industry. It makes everything more complicated. That would be the best one to stop. Did you ask me for two?
FP: Yes, two please.
CA: Okay, so that one I think is critical. The other one is probably the technology front — if technology could be easier. There are so many great tools that advisors can use, and there's a new one coming to market almost weekly. Some of those will get consolidated or rolled into other components. So many of them don't integrate with each other, or you can have it do so by building in a pipeline — it's just more expensive than the average advisor would have the time or money to invest in. But the technology can be such an efficient way to do business, once it's set up. It's not like you can set it and forget it, you do have to have continual improvement in it. So it's costly.
Can I add in a third, if you don't mind? The other one that I was thinking of — which kind of goes along this line of the cost of technology — is our industry spends so much time helping the rich get richer. It makes a great living for hundreds of thousands of advisors and the support staff in the industry. We're forgetting so many other people. That's why I'd love to see the continual investment into robo-type solutions for everyday joes. A lot of advisory firms have [account minimums of] not only $250,000 and up but a million dollars or more before you can work with them. There's not a lot of folks in the industry that can afford that. And I think we're only going to widen the divide if we don't find more of a solution for folks that have under a million dollars to invest.
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FP: What else should our audience know about Carolyn Armitage Consulting?
CA: I just transitioned my website last night to CarolynArmitageConsulting.com. A lot of folks ask about the way I am set up and how I am charging for the services. And I love transparency.
I'm just doing a flat fee, a flat hourly fee, so that, like advisory fees, clients can use as much or as little as they want. There's no long-term commitment. If the [RIA] isn't providing the right services, they can take their assets and move. An advisor can work with me with the right size that fits their budget and get the information and the help, the guidance that they need. And when that's enough for them, they can move on. So someone could hire me to help coach them once a month, one hour once a month. Others are doing a full-blown project of soup to nuts of succession planning and vision and strategy building as well as an overhaul on their team.
I am flexible and not repackaging anything or forcing folks into a box. It's whatever services they need and want, so truly an advocate on their side to help them build the business of their dreams.
