This is the sixth installment in a Financial Planning series by Chief Correspondent Tobias Salinger on how to build a successful RIA. See the previous stories here, or find them by following Salinger on LinkedIn.
Earlier this year, JPMorgan Chase CEO Jamie Dimon explained his profanity-laced tirade against an employee petition to keep the firm’s hybrid work policy in place.
With an expression of regret for having cursed and lost his temper in a company town hall, he told CNBC in an interview (after a recording of the company meeting leaked to the media) that 10% of JPMorgan employees in fact work from home on a full-time basis. He is only against remote offices when those arrangements prove ineffective to productivity.
“I completely respect people that don’t want to go to the office all five days a week,” Dimon said. “That’s your right. It’s my right. It’s a citizen’s right. But they should respect that the company is going to decide what’s good for the clients, the company, etc., not an individual. And so they can get a job — and I’m not being mean — they can get a job elsewhere. … And I also respect the fact that other companies are going to try a different way to grow.”
READ MORE: Large firms seek to show FINRA remote work can work
Upshot for advisors
For financial advisors, that particular episode of the “Jamie Dimon says” show highlighted how the issue of remote work raises often-tense questions of autonomy, business operations, corporate philosophy and personal preferences. It also pointed to the fact that, despite some of the fraught emotions the topic may bring to the fore, registered investment advisory firm owners often decide to have both traditional and remote offices rather than picking one over the other.
“COVID made that a little more flexible to be able to do that at the traditional firms, but a lot of them are reining that in right now,” Brad Wales, the founder of Transition to RIA, where he’s a consultant to advisors moving into RIAs, said of home offices and other remote-work locations. “That’s one of the benefits of the RIA model. If you choose to do that, you absolutely can.”
Team-based structures and the rise of technologies such as remote advisor workstations and virtual meetings are helping more RIAs go remote, said Julie Genjac, the vice president of applied insights for Hartford Funds, where she coaches advisory teams in practice management.
“With roles and responsibilities shared across team members, it has become easier to support clients from various geographic locations without compromising service quality,” Genjac said in an email. “As many financial professionals serve clients who are themselves geographically dispersed, operating remotely enables teams to stay connected and responsive, regardless of where their clients are located. For teammates who need the flexibility to work seamlessly from multiple locations, this mobility allows them to better align their work with personal lifestyle preferences.”
READ MORE: Advisors’ use of offices rises, alongside a never again 9-5 attitude
What the numbers show
Electing to be partially or fully remote, though, can involve any number of factors that include possible compliance ramifications, digital marketing needs and client preferences. In the wake of the pandemic, the portion of Securities and Exchange Commission-registered RIAs that listed a private residence as their main office or one of the 25 largest branches of the firm has more than doubled, according to the latest annual industry snapshot by the Investment Adviser Association, a trade group, and compliance firm COMPLY.
That number is still only 17% of all RIAs. Across employers of any type, 52% of U.S. employees work in hybrid offices, compared to 27% who are exclusively remote and just 21% who must be onsite at all times, polling firm Gallup reported in February.
Advisors can see the benefits and challenges of any setup. More than a half dozen planners from RIAs around the country weighed in with email responses to FP’s query on the pros and cons of working remotely or in a traditional office environment.
READ MORE: 5 must-know tips for financial advisors going virtual
Working remotely
“You have less ‘water cooler’ talk, and it’s easier to shut the door and truly focus, uninterrupted,” said Tracy Baron Garcia, the owner of Lake Oswego, Oregon-based TBG Investing. “Having extra time (with no commute) and being able to build a flexible schedule is a huge advantage — running out for an errand or you can workout during lunch, etc. If you’re independent like I am, you can ‘build’ your own network of ‘colleagues’ who are best in class at what they do across networks like XYPN, NAPFA, CFP Board and LinkedIn. Think CPA tax experts, real estate, various investment firms, insurance providers, estate planning attorneys.””I save 1.5 hours a day on commute time,” said Alvin Carlos, a financial planner and managing partner with Washington, D.C.-based District Capital Management. “I’m able to save $12,000 a year, since I don’t need to pay rent.””It can be challenging to stay focused and disciplined with many possible distractions at home,” said Michael Helveston, founder of Exton, Pennsylvania-based Whitford Financial Planning. “Sometimes (older) clients need further explanation on a particular subject that would be easier to discuss in-person or on paper.””Collaboration may take more time, especially if the team spans different time zones,” said Samantha Mockford, an associate wealth advisor with San Francisco-based Citrine Capital Wealth Advisors. “Camaraderie does not happen as naturally. Though I will also say that, any leader must be intentional to build the culture, regardless of their work setting. My all-remote team is more cohesive and united than my previous in-person team of the same size because of intentionality. People need to be extra intentional to set up boundaries between work and personal time; otherwise it can feel like you’re always on call. There needs to be a work culture that encourages and models fully clocking out; otherwise some employees will not perceive permission to ever relax.”
READ MORE: FINRA tells firms it’s time to register your remote locations
Returning to the office
“Collaboration often peaks when working from a traditional office space with other planners nearby,” said Kristen Vernace, the founder of Portsmouth, New Hampshire-based Pathways Financial Planning. “While there are plenty of ways to message coworkers remotely, there’s a unique ease in simply stopping by a colleague’s desk on your way to the water cooler to pick their brain about a financial plan you’re creating. It might not be important or urgent enough to warrant an email, but since you’re both there — and probably looking for a quick screen break anyway — you might as well ask for their opinion. This leads not only to helpful double checks but can also spark innovative ideas.””In-person meetings allow for eye contact, body language and small moments that can build deeper trust and connection. Nothing can replace a nice, solid handshake,” said Filip Telibasa, founder of Sarasota, Florida-based Benzina Wealth. “It’s easier to bounce ideas off others, collaborate quickly and feel part of something bigger when you’re physically together. … The act of getting dressed, commuting and entering a dedicated workspace can signal structure and productivity. Similar to when I walk into a coffee shop, I don’t even need the caffeine to hit before my brain knows it’s time to get creative.””The benefit of working in the office is that we have fewer distractions,” said Noah Damsky, principal with Los Angeles-based Marina Wealth Advisors. “No delivery packages, family pop-ins or loads of laundry to do. For some, a dedicated workspace can increase productivity and allow us to fully focus. I can understand why it’s easier to focus this way because many have spent their careers, up to 2020, in an office. There’s no right or wrong, there’s just what works. We need to provide ourselves with the best environment to succeed for our clients and for ourselves.”
READ MORE: What’s wrong with the big RIA model, straight from advisors’ mouths
Arriving in-person, or virtually, at a destination
Wales has seen RIAs that are successful on a fully remote or in-person basis, he noted. For each firm, that may change over time, as the advisors and their clients get longer tenures working together and their geographic circumstances shift — or if an RIA begins to focus on a niche base of customers that has nothing to do with location.
“I’ll talk to advisors, and the reality is that only a small percentage of clients are actually local to them,” Wales said. “If they don’t have a lot of local clients, an office footprint might not be necessary, because the clients aren’t going to be coming in, anyways.”
Cohesion among advisory teams and their clients and the “secure, compliant environments for storing sensitive documents and data,” represent some of the biggest advantages of operating from a traditional office, according to Genjac. Costs for parking, rent, furniture and maintenance and the simple complexity of finding an office in some giant buildings constitute some of the drawbacks of offices.
“Another consideration is the uniformity of office layouts, which can contribute to a ‘sea of sameness,’ making it difficult for clients to distinguish one team’s space from another — potentially diminishing opportunities for brand differentiation,” Genjac said.
The dynamics of an advisor’s client base and team of employees will lead one firm to take different approaches from another.
“Ultimately, there’s no one-size-fits-all answer,” Genjac added. “The key is to align the business model with the team’s strengths, the clients’ expectations and the vision for the future.”
