Affiliation Benefits Abound, but Independence Still Has Merits, Say Advisers Who Have Done Both

Many plan advisers have moved to affiliate models for reasons ranging from client service to career pathing, said advisers at the 2023 PLANADVISER National Conference.

It’s no secret that the retirement plan advisement industry is moving toward increased merging and affiliation with larger firms.

But industries do ebb and flow over time. Take wealth management, where financial advisers are more frequently leaving national broker/dealers to join smaller registered investment advisories, according to tracking by consultancy Cerulli Associates.

While being independent can have its advantages in retirement plan advising, the benefits to affiliation are numerous, including when considering the needs of the end client, according to two retirement plan advisers who spoke at the 2023 PLANADVISER National Conference.

“When we looked at the No. 1 criteria, [affiliating] was better for our clients,” said Kristi Baker, managing partner in CSi Advisory Services LLC, which joined Hub International Inc. in 2022. “There have been some significant opportunities to lower costs through the power of being with a larger organization. We had some opportunities to bring some new resources and investment tools to be able to drive costs down.”

Barbara Delaney, a principal in another Hub company, StoneStreet Renaissanceo, notes that another benefit of affiliation is not having to frequently renew contracts and other paperwork, a time-consuming process for both the team and her clients.

“I just got into the practice of telling my clients every other year we have to repaper, so they’’ve come to expect that,” she told the audience of advisers in Scottsdale, Arizona. “That’s one of the things people consider when leaving an independent and becoming part of a bigger group.”

Having the support of a large organization also allows her firm to better weather clients’ large staff turnover, Delaney said. She experienced one retirement plan committee that had 100% turnover during the pandemic, but having the tech and support of Hub was helpful.

“We really felt together that this is something we’re going to accomplish, we’re going to do this together, and we’re going to see it through together,” she said.

Baker also noted that affiliation has allowed her to provide career paths she otherwise would not be able to provide if she had stayed independent. She recounted when one of her staff members had hit a ceiling and was looking for a new job in order to gain more experience. Baker was able to call the Hub office and give that employee a new position within the firm.

“If that employee had walked into my office before, I would’ve had to say, ‘All right, let’s see what you can find, and best of luck,’” she said.

Baker sees an additional benefit of affiliation as outsourcing talent acquisition. “It’s hard to find good people, and that’s not my area of expertise,” she says. She now has someone who specializes in talent acquisition who she can call on to help backfill positions.

Delaney, who founded her advisory in 2008, admitted that most firms have moved to affiliate with larger organizations. “It was hard to find someone who’s not affiliated; thus it’s me and Kristi up here,” Delaney joked during the panel session. “The independent crowd has gotten much thinner.”

However, the affiliated advisers agree there are still advantages of staying independent.

“One of the key advantages is that you are still making all of the decisions relative to the business,” Baker said. “You get to determine your branding. You get to determine the direction of your business. I think that’s a huge appeal to stay independent.”

One of the other important upsides to being independent is getting to choose the company’s footprint and make budget decisions without supervision.

“Definitely, being in the corporate environment now, we have [protection and indemnity insurance], and we have some guidelines that we have to go by,” Baker said.

Ultimately, despite most advisers choosing to affiliate, she believes the model will not completely take over.

“I think there’s still a place for independents,” Baker said. “There always will be in the marketplace.”