'Work harder': Transparent Advisor Movement aims for industry change

Financial advisors trying to drive the profession to be more transparent about fees and services will meet next month at a conference designed to be different from any other in the industry.

The Transparent Advisor Movement's second-ever Immersion conference will take place in Kansas City, Missouri on March 11-13. It is intended for advisors who describe themselves as "advice-only" and charge their clients only flat fees, as opposed to the industry's traditional 1% of assets under management. The ticket price is $300 plus sales tax. A full breakdown of last year's conference shows its costs and a net "surplus" profit of $372. 

The free professional development and practice management group for planners launched in September 2022. It is the brainchild of planners interested in shaping the future of the profession under the collaborative leadership of Sara Grillo, a lead generation and marketing consultant and former advisor whose website states that she is "known due to my outspoken perspective on the BS that unfortunately prevails in the private wealth industry."

Planners have criticized the AUM fee for decades as costly and conflicted because of the incentive for keeping assets under their control and serving the wealthiest clients. While others counter that AUM fees align clients' interest in growing their investment portfolios to advisors' revenue, many planners point to their successes with hourly, retainer or other forms of flat charges. Grillo set the conference agenda with an emphasis on anti-harassment policies, working in "pod" groups of five to six advisors (with attendance capped at 70) and the need "to work harder" together in a country in which large numbers of people struggle financially in retirement, she said in an interview. She also prohibited sponsors, swag and open bars. 

"It should be the paradigm for conferences in our industry in general. We're not here to be entertained," Grillo said. "We should be focused, nose to the grindstone, making ourselves better."

READ MORE: More financial advisors are using non-AUM fees. Here's how

The transparency-focused group is growing through its LinkedIn presence and monthly meetups, such as one earlier this month with about 50 attendees picking the brain of planner Allan Roth, the founder of Colorado Springs, Colorado-based Wealth Logic, on topics that included technology vendors, custodial choices and his concerns about the CFP Board. Advisors can choose from multiple professional organizations to expand their networks, find career development and credentialing resources, perform pro bono services and advocate for the fiduciary duty. However, many still argue that the industry often fails to enforce the highest standards and live up to its professional ideals.   

"'Fiduciary' is a really easy word to say, but a lot harder to practice," Roth said at the meetup. "I will tell you that I've seen brokers at the large brokerage houses who have a whole lot more in the way of ethics than RIAs and CFPs that supposedly have that fiduciary responsibility. I'm a big believer that fee-for-service, whether it be flat fee or hourly — not that it has no conflicts of interest, but has fewer conflicts of interest — that that's probably the best hope to turn financial planning into a profession."

What the Transparent Advisor Movement aims to accomplish

The "transparency" that the Transparent Advisor Movement is seeking to encourage revolves around practices such as collecting a fair fee, displaying it on advisory practices' websites and other places it's easy to find and understand and being upfront with customers when their needs fall outside the firm's expertise, according to planner Scott Salaske, founder of Troy, Michigan-based Firstmetric. He helped Grillo launch the group after they shared a series of ideas with each other a few years ago, Salaske said in an interview. The group could help planners find common ground and resources in confronting issues like the skepticism among some state regulators about flat fees.

"It's a slow change," Salaske said. "Our movement is a speck of sand on a big beach, so it moves slowly."

The conference will feature meetings of the attendee pods, how-to presentations on building a firm without AUM fees and a "non-affiliated, independent dinner" that "participants coordinate themselves" with a warning that the cost isn't included in their ticket price. That last part alone forms a notable contrast with most industry conferences, which often feature pricey receptions and dinners paid for by fund, insurance and technology company sponsors pitching advisors and wealth management firms on their products.

"The people who come to Immersion are those who are called to the mission of furthering the ideals of: clarity, integrity, humility, fairness, logic and advocacy," according to the conference's website. "There is a special focus on advice-only, flat fee and hourly service models. If you feel you are called to this mission, join the Immersion."

READ MORE: Financial advisors find strength, support in professional study groups

Advisors participating in the group can bring more transparency to the profession than any regulatory rules, according to Grillo. 

"The regulators are so backwards that they can't even catch the people who are out there doing criminal activity, so they can't be counted upon," she said. "If the consumers knew that there were better options available, then they would clearly pursue the same product at a much lower price."

The movement also provides a home for younger advisors or career changers who must "understand the profitability and how you can run a business and be fee-only and charge fair fees to clients," Salaske said. 

"They see this as the right path, they want to be transparent, they're trying to do the right thing for clients, but they're trying to differentiate and figure out, 'How can I find new clients?'" he said. "You're trying to move a tribe forward and trying to bring other people who are going to join the movement."