The Pathway to Obsolescence: The AUM Business Model for Advisors and Why It Must Change

By Mike Garrison via

Perfecting a decreasing margin business model is insane…and yet this is happening all over the world today in financial advisor offices.

Years ago technology created the ability for independent financial advisors to come into existence and today that same technology will threaten the survival of many of the same.

Without getting too granular, tech is why you exist (independent financial advisors) and it is why you will survive or thrive going forward.  When the big banks/wirehouses start migrating to your business model, as they have for the past few years, you might ask yourself if that is good or bad (I have written about this in the past on LinkedIn), it is time to work on the next model now!

Here is the deal:  AUM as you currently experience it is done.  It fails miserably when examined transparently by your customer.  You are going to be forced, by technology, to justify your pay on an hourly basis and you will fail when customers realize what you are actually earning.  Understand this, investment performance has become seriously commoditized and your ability to differentiate based upon that as a value proposition is decreasing on a daily basis as the difference between robo performance and your industry average is becoming smaller and smaller.

Do yourself a massive favor and seek to eliminate the following words from you and your company’s communications: Delivering Value. The day’s of you being in charge of how you deliver value are pretty much gone. Now, the real professional (in any industry) is 100% focused on how their customer perceives value and how that perception is being affected by the way people buy today.

Click here to read more on Iris.