New RIA co-op platform targets diversity gap

When Katrina Soelter and Leighann Miko decided to start up Avise Financial, diversity and inclusion were always top of mind.

“A big push for us was this idea that there tends to be a gap in diversity of client base, diversity of advisors, and diversity of associate help,” Miko says

“We wanted to create a platform where not only advisors could come to work with the types of clients that maybe look like them, come from their communities, need help, or don’t fit the traditional mold of what the ideal client looks like,” she says. “There’s a big issue in terms of diversity of people within the industry. It’s very older, white, male-dominated and that tends to trickle down to the employees as well.”

Their solution was Avise, a virtual platform that streamlines back-end business administration – everything from compliance, billing, performance-reporting software, basic tech stack, and transition support – so advisors can better support clients and diversify their impact, all while retaining full ownership of their firm.

To remedy that gap in diversity, Soelter and Miko decided to incorporate a residency program in Avise’s first year of operation to help improve diversity and capacity in the industry.

With the residency program, they hope to partner with organizations like the BLX Internship Program for Black and Latinx planners, sponsored by the National Association of Personal Financial Advisors, that would include a talent funnel of diverse candidates to apply for the residency positions. This would, as Miko says, “create that base layer of experience to allow them to become an advisor in their own right, work for one of the advisors on the platform, or take the first few years of experience and take it to the open market.”

As a queer white woman, the idea of diversity and inclusion is incredibly close to Miko’s heart. While she recognizes that she has experienced certain privileges, there have also been numerous hardships she’s had to overcome in terms of being part of the LGBTQ community and how she navigates spaces.

“Part of why we wanted to partner with BLX Internship Program is because we are bringing more diversity into the profession, by way of the residency program,” she says. “We are training them from literally no experience, up to three to four years of experience, to get them into the industry.”

One of the bigger obstacles the wealth management industry faces, Miko adds, along with many other industries, is retaining talent. If new advisors are in their first few years and they’ve struggled to land a first job or a position at a firm where their values align, they’re more likely to say goodbye to the profession.

“We want to take that friction and remove it a little bit by creating opportunities for people to stay in the industry,” she says.

FOCUS ON BEING FEE-ONLY

The reason to go independent, Soelter says, was that they wanted to incorporate the platform as fee-only. “That is not as possible in some of those other spaces,” she says. “In the independent space, being able to maintain that fee-only standard is critical to getting the message across to consumers of how they’re working with an advisor and how that advisor is getting paid.

“That transparency is important to create the level of trust that they’re getting, the quality of service, and where that payment is going and coming from helps create a sense of trust with the client and with the consumer from the advisor side,” she adds.

The independent model also allows for the ownership of the advisors’ client base and the business that they’re building. “They’re able to really run the practice the way they want to run it… We wanted that flexibility for advisors to create the brand, and the practice that fits their client,” Soelter says.

“Independence makes a big difference for advisors,” Miko agrees. “There’s a need, and there’s definitely a desire for advisors to go independent, and we really want to support that.”

Users of Avise become member-owners who are afforded one vote each, creating an equal playing field and allowing Avise to harness the ingenuity of all advisors, regardless of their AUM or size. “Things like whether or not there’s ever an attempt at a sale, for example, [are] not the same kind of issue, because all of the member advisors have a vote as to whether anything like that would happen, so there’s control back into the hands of the advisors themselves as to how the entity is run,” Soelter says.

In addition, the community of like-minded advisors on the Avise platform will create inherent partnership and succession opportunities.

“They can really get the focus back to where they want to be with clients, while still maintaining their own independence and being able to do their own branding and brand development,” says Soelter. “They can work with what client niche they want, what marketing they want. They can have a lot of autonomy about how they’re running their practice and client service.”

The final factor about operating as a co-op, Soelter adds, is that every advisor who’s a member is eligible to receive a dividend when the company does well. “It’s called a patronage dividend, so the net profit of a co-op gets distributed back to its members… Instead of net profit going back to inherent corporate owners, it goes back to the advisors and members of the co-op itself.”

The platform’s tech stack includes AdvicePay, Advyzon, MessageWatcher, WealthBox, and PreciseFP, and it is using Schwab and Altruist as custodians. But Miko and Soelter say they are considering other fintech and custodial arrangements as well.  

REVENUE CONSIDERATIONS

Soelter said a focus on revenue provided another reason for starting the co-op. After all, options for maintaining and keeping client revenue are diminishing, while most RIA aggregators are paying up to 35 percent on client revenue splits.

“Do we really need to have profit margins of 35 to 40 percent inside of RIAs? Probably not,” says Soelter. “If your advisor is keeping 75 or 85 percent of that dollar a client is paying, they can structure their offering to a much wider and more diverse client base, which gives us the ability to provide good financial-planning quality to a much wider audience.”

That was the ultimate driver of why Soetler and Miko started the platform. There needs to be a different conversation, Soelter adds, about wealth, financial support, and what it looks like to grow wealth as an individual in the US. “Advisors can play a critical role in this, but not if their minimum is $2 million, and they’re not going to be able to lower that if they’re only keeping 30 percent of it.”

Advisors who are interested in joining Avise’s venture should take note of a few things: Avise is a fee-only RIA, there’s a very thorough vetting process involved, and advisors who want to join ideally should be certified financial planners, though there are some exceptions. Advisors should also be “truly interested in a shared-services model where they’re looking to join something and build a community out of it as well,” Miko says.

As for what’s planned for Avise’s future, Miko and Soelter onboarded their first client, David Tassone, principal at Solidi Wealth Advisors. Their three-to-six-month goal is to “take everything we learned from that experience, and make sure all of our systems are a go for our next one,” Soelter says.

Of course, that can’t happen without other advisors knowing about them.

“We’re new, we’re young, we’re fresh, and we’re hoping that lots of people start talking about us,” Soelter adds. “By year end, our hope is to have between three and five advisors on the platform and be launching our residency program.”

“The platform truly exists for the benefit of the advisor,” Miko says. “The reason we chose the co-op model is because we’re not looking at this as like a massive profit center; we’re looking at this as a community of like-minded people who want to do good in this industry.

“If you want to be part of something that is bigger than yourself, that is looking to give back, that is looking to create an impact in this industry, then Avise truly is for you,” she adds. “We really want to partner with like-minded advisors who see the good that we can accomplish together.”