Practices Provide Transitional Wealth Planning to Clients in San Diego Region and Beyond

BY JAMES MILLER

Thomas Goodson at The AmeriFlex Group Discusses Why the Traditional Super-OSJ Model Has Run Its Course – And Why the Hybrid RIA Group Model Will Replace It

The wealth management space continues to grow despite being buffeted by multiple transformative trends – from technology and regulatory shifts, to demographic and consumer behavior changes.

As the industry adjusts, certain business models are under more pressure to deliver greater value to financial advisors, foremost among them, the Super-OSJ model.

Against this backdrop, The AmeriFlex Group has distinguished itself as a new entrant that seeks to grow by replacing the traditional Super-OSJ model with what the firm has dubbed “the Hybrid RIA Group model.”

Founded in 2019, AmeriFlex was formed by a trio of industry leaders who elevate the premise of running a business for advisors, by advisors – Thomas Goodson, ChFC®, CLU®, CASL®, President; Jesse Kurrasch, CFP®, RICP®, CFF®, Chief Operating Officer; and Diana Heu, MBA, Chief Compliance Officer.

And the firm’s Hybrid RIA Group model is clearly resonating with independent financial advisors.  Despite being relatively young as a business, AmeriFlex has rapidly grown to encompass approximately 75 financial advisors across 31 offices in California and Nevada in just two years.

WSR recently connected with Thomas Goodson, President of AmeriFlex, to discuss how the firm has generated such significant growth so early on in the firm’s life cycle – And what’s ahead.

WSR:  How would you describe the traditional Super-OSJ model, and why do you feel this model has reached its limits in terms of continued growth as well as value-add for financial advisors?

Here’s the traditional model:  The OSJ personnel are at the center of a financial advisor’s world, providing regulatory and compliance oversight while hunting for the most possible compensation for themselves.  And all of this happens within the ever-compressing spread between what the broker-dealer receives for their services and what the registered representatives earn in their payouts.

Under the traditional Super-OSJ model, it’s a race to the bottom for margin.  Is it any wonder that financial advisors ask what this model does for them?  For any OSJ to stay relevant and retain advisors, it must constantly reinvent itself to enhance its value proposition and truly support advisor business growth.

I believe this requires the leaders of such organization to walk away from the traditional SuperOSJ model.  We need to flip the script and focus on the financial advisor and their needs, reworking the entire business model from the bottom up Because without a strong foundation reworking the entire business model from the bottom up.  Because without a strong foundation, you have nothing.

WSR:  You’ve stated that the Super-OSJ model should be replaced by a Hybrid RIA Group model – What does the Hybrid RIA Group model look like, how does it function and what kind of value – if executed correctly – does it create for independent financial advisors?

At its core, a Hybrid RIA works with a broker-dealer while running its own independent RIA, maintaining regulatory relationships with both FINRA and the SEC. The advisors under this umbrella register with both the broker-dealer and the RIA.

Rather than thinking of financial advisors who are part of the group as “recruits” or “customers,” the ideal Hybrid RIA Group thinks of the advisors as partners.  And it’s not about the semantics.  One of the most important features of our model is the ability of an advisor to hold an ownership stake in our RIA entity.

Independent financial advisors are more aware than ever before that their practices represent a significant piece of their nest eggs.  With that awareness has come a growing realization that the more ownership opportunities they have in the broader ecosystem they are part of – including the RIA through which they conduct business – the greater the opportunities for long term value maximization.

At the same time, another key feature of the Hybrid RIA Group model is an active curating of the financial advisor population that is invited to join the community.  Independent advisors increasingly are looking for “plug and play” continuity and succession planning options, which is an area we focus on very early on in our engagement with new team members.

Ultimately, for this model to work well, the Hybrid RIA Group needs a healthy relationship with a well-run broker-dealer and the scale to maintain a professional management team that works on behalf of financial advisors.

WSR:  Let’s dive a bit deeper on the equity ownership opportunities.  How do you structure equity ownership deals in The AmeriFlex Group for your affiliated advisors?

We see equity ownership as a benefit to enhance the value of a partner advisor’s practice. Typically, after a year, an affiliated advisor will have an option to buy an equity stake in our RIA.

Advisors also have an opportunity to sell their practice or part of their revenue stream to the RIA. We structure these deals differently to address the circumstances and needs of the advisor. We want to provide equity and liquidity options for partners advisors based on their schedules.

I think it’s important to note that there is no requirement or pressure to buy shares in the RIA or sell all or any portion of an advisor’s practice to the RIA, but based on our last round of equity distribution, approximately 60% of our advisors have taken advantage of the opportunity to become partners in the RIA.

WSR:  What is The AmeriFlex Group doing to position itself for leadership under the Hybrid RIA Group model?

We built The AmeriFlex Group as a community of growth-minded advisors who are “planners first.”  And we wanted to say “yes” to as many requests and suggestions as possible while building incredible value for our advisor partners.

Generally, financial advisors want more flexibility, quicker innovation and a meaningful buffer between the typical bureaucratic back-and-forth from the home office and regulators.

It all comes down to giving advisors the tools they need in an environment they like and partners they respect and support. This way, advisors are better positioned to serve their clients and build their business; it adds value for all stakeholders.

WSR:  What are The AmeriFlex Group’s key growth goals over the next 1-3 years, both quantitatively and qualitatively, as well as your expansion strategy?

Quite simply, we want to be the recognized home for hybrids, where like-minded advisors value holistic services and offer transitional wealth planning to clients.

We plan to support a national footprint and expand to 315 partner advisors within the next three years, with an AUA of $20 billion, revenue of $135 million and a potential enterprise value for our partners of $750 million.

Are these ambitious numbers?  Perhaps.  But we’re confident that our model, our culture and our collective focus will more than enable us to succeed, and our existing member advisors are already experiencing the benefits of our strong growth so far.

WSR:  Please describe your ideal “sweet spot” recruits, and why they should align with an organization like yours.

We look for advisors who thrive in assisting clients with transitional wealth planning needs like retirement, sale or purchase of a home or a business, relocation, marriage, divorce, or loss of a loved one.

The team designed and now operates the AmeriFlex Group to support partner advisors with tools, technology, customized investment solutions, and business development strategies that enable their “planner first” approach.

WSR:  If you had to force everybody affiliated with The AmeriFlex Group to watch one of your favorite movies, what would it be, and why?

The classic 1992 film Glengarry Glen Ross. The seminal scene where Alec Baldwin explains the rules of a sales contest should be required viewing for our industry.

Everyone in the financial services space can relate to this kind of brutality, especially as we continue to see the cutthroat consolidation taking place across the RIA segment.

But I believe a properly designed and run, advisor-owned hybrid RIA can provide a safe home for like-minded partners.

If you would like more information, please contact Jesse Kurrasch at (702) 987-9732 or by email at [email protected] or visit us at www.ameriflex.com.