The top LPL producer has a second RIA-related company that could eclipse the stature of the first one

Ron Carson is the number one producer for LPL Financial. But his LPL practice is fast becoming only the second-largest business that he owns.

The principal of Carson Wealth Management, which advises about $2.6 billion of assets, started an advisor coaching company, PEAK, in 2001 as an organized way to gratify fellow LPL advisors who wanted his ‘secrets’ of success.

Omaha, Neb.-based PEAK now has 20 employees and revenues in the millions. In a big push for growth, it added a web-based resource center that includes forms and information on virtually all aspects of running and building a practice. PEAK’s goal is to have 5,000 subscribers in a few years, up from 800 today. The web-based version costs $300 a month; 285 people have signed on.

In 2009, Carson hired Jon Foster, a former RIA who worked for E*TRADE from 2005 to 2007, as president of PEAK and Carson Wealth. (Carson Wealth Management has 45 employees.)

Pied Piper

PEAK was a hit from the very beginning. Carson was such a “pied piper” around LPL, PEAK execs says, that 83 advisors joined the coaching program in September 2001 as it started up. Carson was not available for this article but I I hope to speak to him in the near future for a follow-up article.

PEAK’s clientele has swollen to about 800 advisors; more than 500 of them pay $475 a month [or more] to be on board. The clientele are mostly IBD reps but also about 30 RIAs and a few Morgan Stanley advisors. Of the IBD reps, fewer than 50% are now LPL affiliates.

Some clients pay more [about $20,000 for a first-year client] for a super-premium service that includes a hefty initiation fee.

Getting financial advisors to pay this kind of money for coaching is easier than you might think.

Clients say that they don’t mind
writing big checks for Ron Carson’s
expertise because he’s motivational and 'authentic’

David Ortiz, principal of The Financial Chef of Coral Gables, Fla. and a National Planning Corp. rep with $60 million of assets under advisement, is paying $20,000 this year, including a $10,000 initiation fee to be part of the premium plan.

“Yes, it’s a lot of money but [the difference is that] they’re holding me accountable” for taking the steps necessary to improve the practice. He adds: “it doesn’t take a lot of clients to make back the $20,000 a year; it takes $2 million of assets [under management].”

Still, Stephanie Bogan, CEO of Quantuvis Consulting says there is one factor for advisors to consider before making the investment — fit.

“It’s a good program but the obstacle I think and base on advisor feedback is that it is based entirely on Ron’s practice – which is great for Ron but not necessarily the “model” every advisor wants,” she says.

Timothy Welsh, president of Nexus Strategy LLC of Larkspur, Calif. is not surprised that advisors happily pay for this coaching.

Clear return on investment

“Most of this coaching content is sales related, and that’s an expertise that few advisors possess, so they will invest in that area as there is a clear return on investment,” he says. “Most participants in PEAK I imagine are smaller, commission-related advisors, so they need the sales focus to turn the crank for their revenues and to be inspired.”

Ortiz, who joined the program this summer, has already had three one-hour coaching calls and has a sense that he can get coaching on demand.

The average client stays on board for 2.5 years. “We expect that number will increase with the introduction of the resource center,”
says Steve Sanduski, managing partner of PEAK.

David Ortiz: It doesn’t take a
lot of clients to make back
the $20,000 a year.

The market identified by Peak is mostly advisors who have established a going concern [about $40 million of assets] but haven’t made it over the hump to organizational success. Only 10% of the advisees have $1 million or more of production.

It’s also striking that PEAK has grown so much even as broker-dealers, TAMPs, mutual fund companies, ETFs and asset custodians are pouring unprecedented resources into providing high-level practice management advice for free.

Considering that RIAs are looking for ways to pinch pennies in these down markets, wouldn’t they prefer to cut out a nasty monthly bill?

Actually, the down economy is all the more reason that people want to sign on, according to Sanduski.

Motivational

“There are lots of coaching businesses but people are really hurting,” he says. “A lot of [what Carson delivers] is motivation.” He
adds: “We run up against an advisor’s own apathy. They plateau. That’s our biggest competition.”

Scott Ford, principal of Cornerstone Wealth Management, an LPL rep whose firm manages $170 million from Hagerstown, Md., has been paying for the premium service since 2001.

“With the coaching program from LPL, it’ll be someone from a fund company. “With PEAK, you’re getting the #1 producer instead of someone with their growth theories. You’ve got someone whose applying it.”

Jon Foster is a former E*TRADE
exec who is taking an operational
load off of Ron Carson’s plate

Indeed, Welsh says that the playing field is still wide open for coaching programs despite the free offerings from custodians and other firms.

“They’re no threat to coaching programs, as even the largest organizations, custodians and B/Ds haven’t — and probably won’t due to the large costs — invest in these comprehensive programs,” he says. “As an example, [one large custodian] has only three practice management consultants decked against 6,000 firms. And most of their advice is fragmented across a number of disciplines on running a business, compensation, succession, technology, organization, etc. and not typically a cohesive program with a beginning, middle, and end with the templates, tools, scripts, processes to make them integrated. There is no comprehensive practice management “product” that advisors can go through.”

Ford tried other coaches previously and the discussion centered almost exclusively on making money. Carson talks about serving clients well.

Authenticity factor

“I’m big on authenticity,” he says. “I wanted to know how to bring the most value and —by the way – it’ll grow your practice.”

Ortiz says he has a similar impression of where Carson is coming from with the advice he shares with fellow advisors.

“Ron doesn’t need to do this,” he says. “He gives value. He truly interacts. I’m totally blown away.”

The enthusiasm of clients like Ortiz aside, Carson is now considering putting a cap on the number of participants so that he and his best trainers won’t be sliced too thin.

Sanduski wouldn’t say at what level the cap would come.