Business is booming.

Q&A With Advisory Services Network’s Thomas Prescott


While the big aggregators in the wealth management space have made headlines this year acquiring ever-larger advisory practices, Advisory Services Network has grown quietly, adding some $1 billion in assets and growing its advisor headcount by 16% over 2020. The firm, which offers a service and support platform to RIAs, now has nearly 200 advisors and 118 offices around the country.

ASN has taken a different approach than many of the traditional aggregators; it doesn’t acquire these practices. And the firm is going after one of the most underserved segments of the wealth management industry—smaller advisors. While many aggregators and a few of the big custodians have shied away from these smaller practices, ASN has specifically targeted advisors with between $20 million and $250 million in assets under management and built its services around this cohort. recently chatted with Thomas C. Prescott, Jr., founder and managing member of the Atlanta-based ASN, about the landscape for smaller advisors, the changing custody market, and why his firm doesn’t offer upfront money for advisors to join.

The following interview has been edited for length and clarity. What’s ASN’s model and the type of advisors you’re going after?

Thomas C. Prescott, Jr.: We’re an aggregator, but not in the vein of the ones you read about most, where you’ve got the Hightowers or the Dynastys of the world. We are taking a different tact.

We’re not private equity-owned; we’re a family-owned business. And we don’t buy practices, so we’re not out trying to aggregate the terms that you read about pretty much every week or every month in the press. We’re a service firm.

Prior to establishing ASN, we owned a consulting practice for roughly 35 years. And so we were out building broker/dealers. We were out building advisors. We were doing regulatory consulting, expert witness work and the like. We did projects all over the world. We helped set up Nasdaq Canada. But we saw our business go from mostly broker/dealer-driven when we started the consulting business to really almost 100%, 95% investment advisor-driven. In that swing, if you will, for where the business was going within the financial services sector, we saw obviously more and more of the breakaways not wanting to be in the broker/dealer community anymore.

We saw it as an opportunity to build a platform. And the platform was really to get out there and offer services to what I call the underserved market. It’s the segment of business that’s below $300 million, below where the other aggregators want to be playing, where they want to come in and purchase the firms and have them join their platform.

We wanted to set up a firm that would basically say, “You come, and you join ASN. You’re self-branded within your communities. Your clients see you, your brand, your logo.” We do all the back office, all the compliance; we bring all the technology. We bring all the infrastructure that’s needed to run a successful practice.

WM: Are you mainly targeting breakaway advisors from the wirehouses?

TP: We’re getting advisors joining us from really three segments: it’s the wirehouses and the bank brokers, and then a fair segment are coming out of the independent broker/dealers. The other segment is people leaving other RIAs or even their own RIA, and joining us now. So it’s the ability for them to join us and continue to brand, be the portfolio managers for their practice, be the center of contact, and it’s not a sale. That’s important to our guys. It’s not a sale of their book. It’s a way to continue in a more expeditious manner and a more cost-effective manner.

WM: Do you have a broker/dealer affiliation?

TP: We don’t own a broker/dealer, but we have partner b/ds that we work with. But really we do that as an accommodation for our advisors. Maybe 15% of our advisors continue to manage money on the b/d side.

WM: How does it work when an advisor joins ASN? Do they come under your ADV?

TP: Yes, ASN is the advisor. But underneath our advisory firm, each one of our offices self-brands as a division of ASN. Our reps, if you will, are managing the money. They’re managing their client. We’re managing the process. So we’re managing the compliance, the regulation, the operations, the custodial relationships, the technology. Everything that is behind the practice that’s needed to make a successful practice run smoothly and regulatorily sound, we provide all of that to the reps.

We have a retention rate of upwards of 88% of the advisors who’ve ever joined us are still with us. That’s pretty impressive given that we’re not buying the practices. We are doing a very high-end service to a market that’s really ignored to some degree. If you’re under $100 million of assets, who’s out trying to buy your practice? So we’re here to service that model. Our largest advisory group has roughly $350 million of assets. Our smallest has around $10 million. But our average advisor’s probably in the $50, $60 million range.

WM: There has been a lot of talk about the smaller advisor, especially in the wake of Schwab’s acquisition of TD Ameritrade. What’s going on with the smaller advisor segment right now, and why are those advisors ignored?

TP: We enjoy relationships with all four of the major custodians (Schwab, TD Ameritrade, Pershing and Fidelity). And when we’re interacting with the custodians, our reps are actually calling us in Atlanta. We’re doing all the operations and all the back office work for them, and we’re intersecting at a much higher level with the custodians. In today’s world you may be hearing that a $30, or $40, or $50 million advisor is having to operate through the email queues or the 1-800 number queues. Our advisors are coming to us, and we’re getting access at a higher level because of our size and scope.

In today’s world though, it’s my read of the market that there’s not a minimum advisor in terms of AUM. I think the custodians are looking if it is a profitable practice to the custody firm? The marketplace has changed.

For us it has not changed because we’re already a larger firm. If you’re a $40, $50, $60 million advisor, you want to make sure you have good service. You want to make sure you have E&O and all the increments that go into a practice. We have all of it, and it’s done at a really economically sound price structure.

WM: Have you seen any uptick in interest in ASN in the wake of Schwab acquiring TD Ameritrade?

TP: Yes, we grew by over $1 billion last year, and we’ve grown by over $1 billion this year. We manage our growth; we’re picking and choosing the advisors that we want to be with us. Like everybody else, we do a lot of due diligence into who’s joining us. We do background checks.

WM: Have you considered adding any new custodians?

TP: We have the four majors right now, and yes, we are adding a fifth custodian this year. I can’t say who that is yet, as the deal is not finished. But it’s a big player.

WM: What’s next for ASN? Do you think you might do acquisitions down the road?

TP: Right now, we’re focusing on succession planning for our advisors. We have a number of advisors who are older. We’re either matching up within our system or we’re helping our older advisors find younger advisors to come up underneath their practice and start working with them, so that it’s a smooth transition over a three, five, or whatever number of years the practice owner wants to continue working.

Will we do acquisitions? We’ve been shown firms over the last couple of years that were for sale. And these were firms we could have gone out and purchased and brought up under our banner. They didn’t seem to be homogenous with the way we wanted to build the business and the way we wanted to continue managing the business. If we saw a practice that made sense, would we? Absolutely.

The big firms are out buying individual practices so that they now become part of an owned practice, that’s not something that we’ve looked at, at this point. It’s clearly something we could do if an advisor wanted to sell their practice to the home office. But we haven’t been asked to do that at this point. Our advisors don’t want that; they want to continue to own and manage their practice, whether they’re growing their practice, whether they’re bringing in new reps or whether they’re a lifestyle practice, meaning that they’ve had their practice for 30 years and they just want to be left alone.

WM: Have you considered offering any kind of capital solutions for your advisors?

TP: We haven’t at this point, because, once again, it’s not something we’ve been asked for. When a firm joins ASN, we’re not offering them upfront money. We’re not doing forgivable loans. People are joining us because of our service and our pricing structure. To me, the upfront forgivable loans are a trap. It’s been a trap in this industry for 40 years, 50 years. “Join us; we’re going to give you $200,000 forgivable over six years.” These guys are now stuck in that practice because they have to pay the money back.

WM: What is ASN’s pricing structure, and how is it different than other firms out there?

TP: We’re not doing a percentage of fees. We do a basis point charge. So there are no hidden charges, whereas the typical competitor is out there saying, “All right, we’ll do it 85/15 or 90/10.” And then you pay for E&O and you pay for technology and you pay for this and you pay for that, backend charges, platform charges, if you will. We don’t believe in them. We want to be 100% transparent. If you’re under $20 million, you’re going to pay us 12 basis points, or $24,000 a year minimum. At 12 basis points, everything that we’ve talked about is included. If you get to $50 million, that charge drops to 11 basis points; you get to $100 million, it drops to 10. If you get to $150 million, you drop to nine and so on.

What we’re trying to stay away from is hidden charges. You’re not going to end up having to pay for your E&O. You’re not going to have to pay for your Black Diamond, for your compliance software. You’ll pay for your individual state license, or your individual state registrations. We pay for the firm registrations. It’s really different from what you see if you go to an IBD channel or some of the other channels that are out there.

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