What’s Your Why? Insights from the US Wealth Advisory Industry and Providend

Discovering the Why

It’s the 23rd of September 2024, and I just spent the last 10 days in the US together with 2 of my other colleagues, Chris and Nataly, to visit and speak with various fee-only firms and wealth advisers gathered at Austin, Texas, from across different parts of the US and the world.

During this trip, I’ve also been reading Simon Sinek’s book, Starting with Why, which sparked my curiosity about the “why” of the firms we visited. Some demonstrated a strong purpose and vision in serving clients ethically, addressing gaps in the financial services industry. Others, however, seemed more focused on commercial interests.

How US Wealth Firms Plan for Growth

After 10 days of conversations with various firms, we gained insights into the current state of the US wealth advisory industry and its key areas of focus.

1. Most Firms Want to Grow, but How They Plan to Achieve Growth Is More Important.

Do they aim to grow by expanding their client base or by focusing on high-net-worth clients? How will they manage their time and capacity while maintaining high standards of client service?
Are they reinvesting profits to build the right infrastructure for their desired future?
Do they measure growth solely by profits, leading to cost-cutting and reduced service offerings?
And crucially, how do they differentiate themselves in a saturated U.S. market with abundant choices?

2. Succession Planning

Discussions about long-term firm continuity came up repeatedly and are often cited as a challenge for many firms. This issue is crucial because it requires intentional consideration of how to balance the needs of various stakeholders—primarily clients, employees, and firm owners. A short-term focus on preparing the firm for a quick sale might benefit the owners but may not be ideal for clients and employees.

3. The Allure of Shiny Objects

There’s a noticeable trend towards more “exciting” investment vehicles like private markets and hedge funds. I call these “shiny objects,” a category that might also include thematic funds or cryptocurrencies. Private markets, in particular, came up frequently. When asked why these are included in clients’ portfolios, the answer often boils down to client demand.

4. Technology and AI

Many firms recognise technology’s importance in scaling their business long-term, especially with the rise of artificial intelligence (AI). However, technology’s broad scope requires a clear vision for its use—whether for efficiency and productivity or to enhance capabilities and service offerings. It also demands significant capital investment from firms, with rewards often realised only over time.

5. Fee Compression in the Wealth Advisory Space

As in any industry, multi-faceted competition—whether from U.S. Registered Investment Advisors (RIAs), robo-investment platforms, or big banks—leads to fee compression. This compression manifests as either lower fees or a higher number of services for the same fee.
This trend compels each firm to clearly define their value proposition to clients, enabling them to stand out in an increasingly crowded market.

I discuss these observations and considerations not to suggest there’s a single correct approach. Rather, I emphasise that every firm’s decisions about their future direction must be rooted in their “why”—their fundamental purpose and motivation.

Providend’s Why

Providend was founded in 2001, driven by Chris and the founding team‘s strong desire to address issues plaguing the financial services industry. These issues included conflicts of interest, high fees, lack of transparency, and poor advice and competence.

Starting out in the insurance industry, they grew frustrated with how the industry and compensation structures incentivised a short-term focus on product sales rather than supporting holistic, competent advice as a long-term partner. Given that wealth advice can significantly impact a family’s financial future—potentially making or breaking it—having an ethical practice and genuine care for clients is crucial.

This led to the founding of Providend in 2001.

Our purpose statement, written sometime in 2010 by Chris, remains a relevant compass guiding every decision we make. In 2021, Chris further illustrated how he defines our vision, purpose, and mission. With the right core values, we aim to fulfil our purpose: being the best independent and comprehensive wealth advisory firm for our clients, caring for them as we would for family members. To achieve this, we seek to tackle and overcome expected challenges to accomplish various missions, which Chris calls our BHAG (Big Hairy Audacious Goal).

Havend’s Mission: Serving the Mass Market with Purpose-Driven Insurance Advice

I’d like to touch briefly on Havend, as it illustrates how our purpose guides every corporate decision we make. Havend, a sister company specialising in insurance, was started in 2023. It represents our fifth attempt to serve the mass market while still embodying our core values of conflict-free, transparent, and competent advice.

I’ve visited several countries with more developed fee-only practices, such as Australia, the US, and the UK. In each of these markets, serving the mass market tends to be more challenging, often leading firms to focus on higher-net-worth segments. So why do we persist in this endeavour, despite the higher risks and challenges? It’s because we’re guided by our purpose. We certainly wouldn’t have attempted this if our focus were purely on company profits.

My Why for Joining Providend

Beyond the company’s “why,” the individual “why” of every Providend employee is crucial. I joined Providend in 2019 after a nine-year career with Singapore Airlines, where I held various commercial positions across different countries. While my time at Singapore Airlines was valuable, I yearned for a deeper purpose in my work, particularly in personal finance—a passion I’ve harboured since receiving my first paycheck.

Years ago, I read Daniel H. Pink’s book Drive, which discusses how autonomy, mastery, and purpose are the key drivers of intrinsic motivation. Now, five years into my journey with Providend, my “why” for joining remains as strong as ever.

Staying True to the Why

In most cases, doing the right thing based on a strong “why” is important, but rarely easy. Even for firms that started with clear intentions, it takes unwavering effort and conviction to stay true to their course.

The same holds true for Providend. Our journey hasn’t been easy, particularly in the early days when we went against the grain, facing numerous challenges in our mission to provide honest, independent, and competent wealth advice to families. While we’ve made significant progress over the past two decades, new challenges will always arise for the firm. How we choose to overcome them depends on why we’re doing this in the first place. I believe that as long as we stay true to our “why,” we will prevail.

Lastly, as we end the year, I’d like to give a shoutout to the Providend team reading this. The year hasn’t been easy, given the significant time and effort required to implement our many client-focused initiatives. It’s particularly challenging because many of these initiatives are long-term, with no immediate results visible. It’s often a learning process too, but that’s nothing new. Providend has evolved to where we are today because we’ve never taken the easy way out or simply gone with the flow. Most importantly, always remember your “why”.

This is an original article written by Tan Chin Yu, Lead of Advisory Team at Providend, the first fee-only wealth advisory firm in Southeast Asia and a leading wealth advisory firm in Asia.

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