What exactly is Fusion Advisor Network and who did it draw to Las Vegas last week

Brooke’s Note: I finally got to meet Philip Palaveev in person over dinner last week as he came through San Francisco for a client event. With his quick wit, intellect, irreverence and the strong Bulgarian accent that he uses to for humor and emphasis, he’s more than a little unique. As a sampling of the thoughts he offered, Palaveev sardonically said that we should just go ahead and write Greece a check for $350 billion because it’ll cost the world far more not to. He added that his company booked a few too many rooms for his SF event so he joked that he was going to jump on all the unslept-in beds. It’s not surprising to me that advisors are starting to appreciate Palaveev’s smarts and satirical instincts that I have known from years of phone conversations.

Held over two and half days at the Wynn Encore Hotel and Resort in Las Vegas, Fusion Advisor Network’s annual gathering provided a jam-packed agenda of fun, networking and business management content, October 12-14, 2011.

Over 150 advisors and sponsors convened at Fusion’s event to learn about the latest developments in growing their businesses and to network among each other, sharing the best ideas for enhancing their practices and to enjoy the best of what Las Vegas offers.

Fusion Advisor Network is truly a unique organization in the financial services industry. Founded by Stuart Silverman in 2003 with the idea of combining the freedom of independence with the sense of belonging and the power of a network that exists in the big wirehouses and insurance firms, Fusion has been growing quickly, and now represents 118 firms with 248 advisors, and its advisors oversee $11.2 billion in assets including $3.2 billion in assets under management and $8 billion under advisement.

Salameh signs on

Bolstered with the addition of Moss Adams alumni, Philip Palaveev as president and the newly acquired chief marketing officer, Abby Salameh, formerly the marketing guru at TD Ameritrade Institutional, and Fusion has the experienced management talent and team to continue to build on the momentum created by Silverman. See: Former Moss Adams star begins to taste success in the 'real’ world.

Tim Welsh: Fusion conducts its own
retreats based on mindfulness and meditation
to recharge advisor batteries, as well
as a focus on social activities,
including ski clubs, running clubs, yoga
clubs and other social groups.

For those not familiar with the Fusion model, Fusion is a practice management and consulting “overlay” to the independent broker-dealer NFP. See: 5 Reasons why the hybrid RIA model may be a bigger deal than ever. Fusion provides practice management, technology and marketing consulting to its member firms, all extremely valuable services for independent advisors. But where Fusion shines is in its sense of community and a dedication to creating a work-life balance.

Not only will you find idea sharing, access to the latest business management, technology and marketing ideas, along with the tools and templates to systematize your business, but also an eclectic culture that Silverman created to make being an advisor a fulfilling and fun career. As an example, Fusion conducts its own retreats based on mindfulness and meditation to recharge advisor batteries, as well as a focus on social activities, including ski clubs, running clubs, yoga clubs and other social groups.

Learning from the Big RIAs

While definitely centered in the independent broker-dealer world, Fusion is a learning organization, open to tap into the secrets of the best advisors. To this end, the conference kicked off with a special pre-conference workshop moderated by Palaveev that featured some of the most successful RIAs in the industry. These billion dollar RIA heavyweights included Greg Friedman of Private Ocean, Dale Yahnke of Dowling & Yahnke and Ken Evans of Moss Adams Wealth Advisors.

Greg Friedman lent knowledge from the
RIA world.

Looking to refresh a page from the RIA playbook that Palaveev wrote while a consultant at Moss Adams, these three industry luminaries shared how they grew their firms past the first $1 million in revenue. The discussion and Q and A revealed that among these big RIAs there were commonalities on the issues and strategies necessary to grow their firms beyond the founders.

In summarizing the content from this 6-hour workshop, Palaveev noted that, “The first million in revenue is going to come from the owner. However the second million in revenue is going to come from and be serviced by others.” In order to facilitate this, the one commonality among these successful firms was to hire good people. Somewhere in the history of each of these firms, the founders began to hire professionals that were highly credentialed, ambitious and they gave them a lot of responsibility early on.

Paying pays

While this can be a daunting proposition for an emerging firm to invest in a new person to the tune of $80-$120,000 per year, Palaveev makes the case for why advisors need to do it. “The economics are there. Each professional in these firms is now generating $500,000 to $1.2 million which represents an 80% gross profit.”

The next key area of focus for these firms as they crossed higher revenue thresholds was to hire a dedicated operations manager.

“At these levels of revenue in the $3 – $5 million range, there is the affordability and complexity of operating that will necessitate a role to formally manage the firm’s operations,” noted Palaveev. “These are not the people doing the work but an actual person managing the multiple processes.”

Another key factor for success in growing beyond the founders is to balance the level of customization in service and portfolio management with the need to systematize and automate processes.

Choosing vanilla

Palaveev offers this somewhat counter-intuitive advice: “These successful firms are providing very basic portfolios with plain vanilla investments. I think sometimes in this industry we overthink what clients need in terms of alternative investments, tax efficiency and such. Maybe for the $50 million client, but for the majority of clients these billion dollar firms serve in the $1-2 million range, a very simple asset allocation and index products are all that are necessary. This simplification of the investment process has tremendous impact on profitability, capacity and advisor productivity, while clients are more than satisfied, loyal and become referral agents.”

The final factor for success as firms grow larger is to create, maintain and manage a strong culture. At this level of firm size, these practices will have 30 or more employees and the staff needs to have an organizing principal that is understood for what the core values of the firm are, what is expected and why employees and clients are attracted to the practice. “Culture is what happens when no one is watching,” advised Palaveev. “Principals of the firm need to lead by example.”

The Business of Vegas

One of the more entertaining and informative sessions was clearly the opening keynote provided by Brian Gullbrants, EVP and General Manager of the Wynn Encore properties. Gulbrants provided a humorous and informative view of what goes on behind the scenes in operating a 12,000-employee, 5-star and 5-diamond, high-end resort in Vegas.

“Our goal is to take all of your money and have you thank us on the way out,” quipped Gullbrants. But on a serious note, Gullbrants made some very key comments on how running a hotel and casino is very applicable to the investment advisor industry.

“We are all in the same business, which is customer service,” noted Gullbrants. “To be successful on such a large scale and have people return is to rely on our culture.” Gullbrants went on to relay how Steve Wynn, a true pioneer and visionary, built a strong culture around hiring employees who truly care about the guest experience, make great decisions, are fun to be around and who engage with guests.

Steve Wynn also made a deliberate effort to expand opportunities to drive revenue by creating adjacent businesses such as famous chef restaurants, high-energy nightclubs, celebrity entertainment, transportation companies, and more. “To see how powerful this brand extension has been is that now over 60% of our revenues come from non-gaming activities,” remarked Gullbrants.

The rest of the conference agenda focused on various business and practice management breakout sessions, including an update from the underlying broker dealer, NFP. “Historically, we’ve been a sleepy broker-dealer behind the scenes,” said James Poer, President of NFP Advisor Services Group. “But we are out to raise the profile of the organization.” Poer detailed a long list of technology enhancements, new products and resources NFP will be bringing to market to support their advisors, including a new Social Media strategy, platform and technology due in the first quarter of 2012.

Beautiful people and sports betting

Fusion’s commitment to fun did not disappoint. Like all conferences in Vegas, attendees benefit from the many opportunities to take in a show, play the slots, roll the dice, bet on sports, ogle the beautiful people, or simply lounge by the pool in sunny, warm, desert weather. Truly, October in Las Vegas is not to be missed.

The Fusion conference ended with a closing night-party at the elegant Tao nightclub in the neighboring Venetian hotel/casino. Attendees dined on fine food, sipped elegant cocktails and enjoyed the ambiance, music and colorful characters that are a staple of Las Vegas.

As a first time attendee at the Fusion conference and a newcomer to the Fusion business model and culture, I am impressed with the open community, inclusiveness and highly motivated and successful advisors. As the independent industry continues to evolve, it’s my guess that there will be more emerging approaches to advisor support that will look a lot like Fusion.

Timothy D. Welsh, CFP® is President and founder of Nexus Strategy, a leading consulting firm to the wealth management industry, and can be reached at tim@nexus-strategy.com or on Twitter @NexusStrategy.