InvestmentNews Article: Advisory firms’ value is tied to the market’s value
With the stock market hitting all-time highs, many practices are reaching new highs in assets under management, as well. Your advisory firm may be at a high-water mark for revenues, but if you’re approaching retirement age, prudent planning would involve looking for ways to reduce the hidden risks of this link.
This InvestmentNews article written by our Co-Founder Scott Hanson reads:
If you’re an adviser, hopefully you don’t recommend that your clients use leverage to juice returns. (Especially not your older clients.)
Yet many principals of advisory firms are themselves highly leveraged, and most do nothing about reducing that risk, even as they near retirement.
I’m not referring to leverage in the form of debt, but, rather, leverage in the way the value of the business fluctuates with the value of the markets.
Scott Hanson, Co-Founder, Allworth Financial