December 2, 2023

Equitable Advisors has seen steady growth in the five years since its former parent spun off its U.S. subsidiary, and the firm has ambitious wealth management plans for the next five.

The wealth arm of Equitable Financial Life Insurance, a New York-based insurer and annuity issuer, represented the tenth-ranked firm Financial Planning IBD Elite Ranking One of the largest independent brokerages in the industry, with annual revenue of $1.45 billion last year. In an interview with FP Chief Correspondent Tobias Salinger, Equitable Advisors Chairman David Karr explained how the firm seeks to grow earnings at a 15% compound annual growth rate over the next five years.

Equity Advisory Board Chairman David Carr
David Karr is chairman of Equitable Advisors in New York.

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AXA spin off its US holdings A 2018 IPO raised $4 billion, followed by sell its remaining shares the following year.exist early 2020, the wealth management firm’s parent company changed its name from AXA Equitable Life to Equitable Holdings. The US company also owns 65% of investment management, research and private wealth firm AllianceBernstein.

Equitable had more than 4,100 financial advisors and $76 billion in client assets at the end of the first quarter. Some 2,300 of them are “generalist advisors,” 1,100 are “retirement specialists” who work with teachers and other K-12 employees, and 700 are “integrated wealth planners,” according to the report. Investor Presentation for May.

The number of wealth management firms owned by insurers is shrinking and they face stiff competition and stricter regulation Consolidation in the industry and continued progress towards Trust Advice from Registered Investment Advisory Firms. Other “key players” in mass affluent retail clients with $500,000 to $2 million in investable assets — a market of 12 million households with more than $12 trillion in assets — include Raymond James, Ameriprise, Osaic (formerly Advisor Group) and Cetera Financial Group, the presentation said.

Carr spoke to the Financial Times after the firm made wealth management a reporting part of its quarterly earnings statement earlier this year.

The following conversation with FP has been lightly edited for length and clarity.

FP: What are Equitable’s wealth management growth goals?

David Carr: When we think about our growth objective, it refers to increasing our assets under management as well as our earnings. Where we are most explicit in terms of forecast is our earnings growth. So by 2022, we’re going to be $100 million after-tax, and our forecast for the next five years is $200 million after-tax. As a result, we expect revenue to double within five years.

FP: What is the company’s approach to achieving this goal?

Denmark: There are two main metrics that help us achieve this. One is the growth of consultant productivity. So over the last five to ten years, we’ve seen tremendous growth in advisor productivity, and we expect advisor productivity to continue to grow that way. And, as we scale, it helps our margins as well. So while we’re a top 10 broker-dealer today, we want to continue to scale and grow our margins with that scale. So that’s the two indicator drivers.

In terms of strategic drivers, it’s really about helping our advisors develop a really holistic practice — not just a holistic practice from a financial product perspective. We have an open architecture, so they can work with customers based on what they want, what the product needs, but also think holistically in terms of how they work with customers. We do a lot of work with Columbia University and do our training there. We develop a comprehensive life planning program with the true purpose of creating deeper, more meaningful conversations with our clients that go beyond finances and connect finances to those personal goals and personal things that matter most to our clients. It’s a combination of factors (and of course the technology platform, etc.) to ensure we support our clients’ practices and add value to them.

FP: Breaking into the field as a financial advisor can be difficult given the difficulty of establishing a business record and the traditional industry method of utilizing friends and relatives in your network. How big is Equitable’s Rookie Advisor Program? How do companies successfully launch a broker’s career?

Denmark: Normally, 600 to 800 new consultants are hired each year, and these are new to the industry. As you know, many companies in this industry have stopped doing this. But we do think it’s very important to our long-term strategy for a number of reasons.

One is that it does contribute to the age of our advisors. So our average age is 47, which is significantly lower than the average age of most consultants. This is a very important thing. Another important thing is that it helps our mature consultants grow their firms. So as they grow their firm, it gives them an opportunity to see our new consultants come on board as they grow. Then they transition to those companies. We have 200 established and growing companies.

So when I think about how we can help advisors make this transition, we’ve been doing that for a long time. This is an important part of our work. Our Development Rating is approximately double the industry average in terms of development and retention over a four-year period. I would say that our success in this area really comes from the training program, the infrastructure that we provide and the support that we provide through the leadership and management programs.

Each consultant is appointed by a manager who may hire four to six new consultants each year whose main focus is to help those four to six consultants grow their practice. As advisors grow, develop and achieve some success, then, at some point after three or four years, they typically join another team. As such, they will be part of a larger group and a larger infrastructure. This will contribute to their further growth, success and retention of us.

FP: What is the relationship between Equitable Advisors and Equitable Financial Life Insurance and AllianceBernstein? How does the company mitigate conflicts of interest arising from its association with two major product providers?

Denmark: First, we have a completely open architecture in terms of our approach to our customers. So, of course, while we do sell the parent company’s proprietary products, in terms of insurance and annuities we have a partnership with Crump (Life Insurance Services) who offer an open architecture so our advisors have access to most of the major carriers in the space.

And then on the investing side, we clear and partner with LPL through LPL (financial) and leverage their platform to bring thousands of broker-dealer cuts RIA type products to our clients or advisors. Our consultants are able to actually pick and choose the products that best suit the client’s situation.

Of course, with the Department of Labor and fiduciary rules in place today, it’s not only philosophically important that we do so, but it’s also important from a regulatory standpoint that we build these walls and make sure our advisors are impartial in advising clients.

FP: What else should financial advisors and their clients know about Equitable Advisors?

Denmark: If there’s a headline, it’s that our model is really about supporting independence, and it’s really about helping advisors.

When we hire a senior consultant, we’re a great fit for that consultant. Open architecture is important. They want independence, but they also want the support and infrastructure of larger companies around them. So, for many independent companies, what appears to be independent is actually truly independent. They put up their own sign pretty much on their own and take care of everything from start to finish. In our world, consultants are able to benefit from the support of over 30 branch offices across the country, and our existing infrastructure provides a higher level of support than a typical, purely standalone approach.