Equitable Advisors has been growing steadily in the five years since its former parent spun off its U.S. arm, and the firm has ambitious wealth management plans for the next half decade.
The New York-based wealth arm of insurer and annuity issuer Equitable Financial Life Insurance represents the No. 10 firm
French insurer AXA
At the end of the first quarter, Equitable had more than 4,100 financial advisors and $76 billion in client assets. About 2,300 of them are "generalist advisors," 1,100 are "retirement specialists" working with teachers and other K-12 employees and 700 are "comprehensive wealth planners," according to
A dwindling number of insurer-owned wealth management firms face tough competition
Karr spoke with FP after the firm made wealth management a reporting segment in its quarterly earnings statements earlier this year.
The following conversation with FP has been lightly edited for length and clarity.
FP: What are Equitable's wealth management growth targets?
David Karr: When we think about our growth targets, it's in terms of growing our assets under management, as well as our earnings. And the thing that we've been most explicit about in terms of our projections has been our earnings growth. So in 2022, we reported $100 million in after-tax earnings, and our projection over the five-year period is that we'll reach $200 million in after-tax earnings. So we expect to double our earnings in the five-year period.
FP: What is the company's approach to reaching that target?
DK: There are two primary metrics that get us there. One is advisor productivity growth. So we've seen tremendous growth in the productivity of our advisors over the last five to 10 years, and we expect to continue to see that growth in advisor productivity. And, as we gain scale, that then also helps with our margins. So, while we're a top 10 broker-dealer today, we want to continue to gain scale and with that scale improve our margins. So those are the two metric drivers.
As far as strategic drivers, it's really about helping our advisors develop really holistic practices — not just holistic from a financial product standpoint. We have open architecture, so they can work with their clients on whatever the client's needs are, whatever the product needs are, but also holistic from an approach to how they're working with clients. We do a lot of work with Columbia University where we do training. And we've developed a holistic life planning program, where it's really all about creating deeper and more meaningful conversations with clients that go beyond finances and connecting finances to those personal goals and those personal things that are most important to our clients. It's a combination of the factors — of course, technology platform and so forth — to make sure that we're supporting and adding value to our clients' practices.
FP: It can be difficult to break into the field as a financial advisor, given the difficulty of building a book of business and the traditional industry approach of tapping friends and relatives in your network. What is the size of Equitable's rookie advisor program? And how does the firm successfully jump-start a broker's career?
DK: In a normal year, anywhere between 600 and 800 new advisors, and those are people brand-new to the industry. As you know, much of the industry has stopped doing that. But we really feel like it's very crucial to our long-term strategy for a number of reasons.
One is it does help the age of our advisors. So our average age is 47, which is significantly lower than the average age of most advisor bases. And that's one really important thing. The other important thing is that it helps our established advisors as they grow their firms. So it gives them — as they grow their firms — an opportunity to see our newer advisors coming in as they're developing. And then they transition into these firms. We have 200 firms that are established and growing.
So, when I think about how we help advisors make that transition, we've been doing this for a long time. That's a big part of what we do. Our development ratings are roughly twice the industry average in terms of development and retention over a four-year period. And I would say that our success in that area is really from the training programs, the infrastructure that we provide, the support that we provide through the leadership and management programs.
Each advisor is brought on by a manager who hires maybe four to six new advisors a year and their primary focus is helping those four to six advisors develop their practices. As the advisor grows and develops and establishes some success, then, at some point three, four years in, they typically will join another group. So they'll become part of a larger group and a larger infrastructure. Then that contributes to their further growth and success and retention for us.
FP: What's the relationship between Equitable Advisors and Equitable Financial Life Insurance and AllianceBernstein? How does the company mitigate the conflicts of interest that come with being affiliated with two large major product providers?
DK: First of all, with respect to our approach to clients, we have completely open architecture. So, while we do, of course, sell our parent company's proprietary products, on the insurance and annuity side, we have a relationship with Crump [Life Insurance Services], which provides open architecture so our advisors have access to most of the major carriers in the space.
And then, on the investment side, we clear through LPL [Financial] and partner with LPL and leverage their platform to bring literally thousands of broker-dealer slash RIA-type products to our clients or to our advisors. And our advisors are able to really pick and choose the products that are most appropriate to meet the client's situation.
Of course, with the DOL and the fiduciary rules that are in place today, it's not only philosophically important that we do it, but it's, from a regulatory standpoint, also important that we build those walls and make sure that our advisors are not biased in making recommendations to their clients.
FP: What else should financial advisors and their clients know about Equitable Advisors?
DK: If there's one sort of headline, it's that our model is really about supported independence, and it's really about helping advisors.
As we bring over established advisors, we're a great fit for the advisor. Open architecture is important. They want independence, but they also want the support and infrastructure of a larger company around them. So for many independent firms, what independence looks like, is really, really independent. And they're pretty much on their own hanging their own shingle and responsible for everything from A to Z. In our world advisors are able to benefit from the support of over 30 branch offices around the country, and the infrastructure that we have in place is a much greater level of support than the typical, pure-independent type of approach.
