Earlier this year, AE Wealth Management brought on Shannon Larson, a former Osaic executive, as its new president. At Osaic, Larson’s leadership helped scale the firm to $230 billion through different strategies. Now, AE Wealth is hoping she’ll help achieve its goal of $250 billion in managed assets by 2035.
The RIA just hit its 10-year anniversary this summer, and has just over $52 billion in assets across 600 advisors.
In a recent interview with Wealth Management, Larson outlined her ambitious plan to help the firm reach that goal as well as initiatives she’s already gotten off the ground, including a significant rebuild of the RIA’s advisor portal.
The following has been edited for length and clarity.
Wealth Management: Would you provide an update on what you’ve been up to since taking over?
Shannon Larson: We just hit our 10-year anniversary in June, and we’re at just over $52 billion in assets. We work with about 600 advisors, and where we started has been really focused on primarily working with insurance-based advisors and helping insurance advisors move into wealth. And I would say one of the big opportunities and why I think I was selected for the job is that I’ve helped firms scale from, most recently, $40 billion to $230 billion through a lot of acquisitions and different strategies.
And I think what makes AE unique is that our independent advisors are organic growth machines. Our organic growth rate across AE Wealth is about 12% per year, which is far above industry standards. And as they’ve continued to move in and embrace wealth management, I’m really focused on how do we help build a platform that supports them with their growth, whether they’re starting out, which some are, or are large RIAs or advisors that use us as their RIA.
We don’t have any advisor employees, and that’s not something we’re focused on. We’re focused on helping advisors grow and build scaled wealth management businesses. And they’ve got the organic growth figured out. And now it’s, how do we continue to help them to build, grow share of wallet from existing clients, increase client success and incorporate things like securities-based lending?
We’re focused on helping them with three client segments. One is the mass affluent that we’ve always worked with our advisors on. But our advisors are starting to get more clients in that $2 (million) to $10 million range. Then, as they want to go upmarket even further, we are helping them with that as well.
WM: Since you came on, what changes have you made, if anything, and what initiatives have you gotten off the ground?
SL: One of the big areas of focus has been on expanding the toolkit for advisors that are working with clients with over $2 million. That included launching more robust securities-based lending capabilities and really helping advisors understand how to position that to the clients. It’s really about what’s best for the client, and if they have a liquidity need, they don’t have to take the money out of their plan and their investments.
We’re about to launch some additional charitable solutions, including a donor-advised fund and some of the solutions from the custodians as well.
Our alternatives platform is called AE Private Exchange. We partner with CAIS on that, and we’ll be expanding some solutions there for some pre-IPO and some sports alternative strategies. We’ve built models in that. We don’t just open up everything, but help them navigate the choice.
We’re also doing a pretty significant rebuild on our advisor portal with our advisor experience. We have a lot of great technology, but how do we integrate it better and use AI as an overlay? The platform builds in everything from digital account opening to client review tools. And all of that is in progress right now.
WM: Can you expand on that? What will the tech platform look like?
SL: We have two different types of advisors who work with us. We have the independent RIAs that use us as a TAMP. Then we have about half of our advisors who are under our RIA as IARs. Every 1099 independent advisor can go and use what they want in certain areas, but if they’re under our RIA, we have more supervision and things we need to do. But we want to be the place that they can go to do business and work across proposal planning, looking at recommendation opportunities for clients, that case design and helping understand how to invest that client portfolio and then connecting that into implementation, account opening, client reviews, ongoing reporting. We’re not going to be a financial planning tool, and we’re not going to take on things where there are great vendors and partners out there that we can work with. But we will be the experience layer on top. And if they want to go use something else that’s not in that ecosystem, they can.
We’ll be showing that portal to our advisors at our big conference in September.
WM: How is that different than other firms that say they have an advisor portal?
SL: The difference is that we don’t have the same legacy that some other firms have. We’re at $50 billion. It’s not a small number, but we are able to move pretty quickly. We’re putting on a layer of AI that’s going to help advisors with it. And I do think that our advisors are more open to using what we recommend, so while they’re totally independent, we offer them choice. I think we’re able to suggest, ‘this is the tool you should use for this,’ and we can embed it in the adoption.
WM: Are there any specific vendors that you’re working with?
SL: We work very closely with Orion. We continue to partner with them, but again, we’re trying to focus on where we add value. For example, when we think about our advisor portal, they can absolutely get into Orion, but we’re focused on surfacing the insights and most relevant information for them and reports through that. So that would be an example of how we work with them.
Also, we have a pretty sizable direct indexing and tax management platform, with $13 billion in assets in direct indexing strategies. We are partnering with Aladdin behind the scenes and we’re launching more capabilities through that partnership.
WM: Are you partnering with anyone on the securities-based lending?
SL: Yes, we’re working directly with Schwab and Fidelity for that.
WM: Are you looking at building out a W-2 model?
SL: I think everyone’s kind of focused on a W-2 offering. We’ve been more focused on, how do we help advisors if they have liquidity needs or want to take some chips off the table and possibly invest in even M&A? So we have built what we call our advisor support network, which will take minority stakes in advisors. But we don’t have a W-2 model. I think we have an active succession process as well. I do think that’s a place where we’re a little more unique in where the industry’s going. We’re not purchasing their businesses outright right now.
WM: When you say you’re working with insurance-based advisors and helping them get into wealth, where are those advisors coming from?
SL: We probably have around 800 advisors who are part of Advisors Excel. And many, many have over the last 10 years, gotten into wealth at different levels. But we started the RIA to help advisors expand beyond the retirement income planning they were already doing. They had an interest, and they wanted to do everything with one firm.
One of the unique things that we do is that we have about 1,100 employees, 200 of whom are in marketing. So we are really helping our advisors market their businesses and build practices and systems to scale and grow. The advisors we work with, first and foremost, are coming over from the Advisors Excel insurance side of the business. And they are looking to expand or move their assets. Maybe they’ve used an outside TAMP, but they want to do it all within one place.
WM: The firm aims to reach $250 billion by 2035. What’s the strategy for doing so?
SL: The first thing is helping existing advisors grow, continuing to invest in them, and supporting them with our organic growth strategies. I mentioned we can help them with M&A, and we are actively doing that as well. Helping them grow with existing clients through things like aggregation. We’re offering different ways to think about Experience Alpha. So how do you think about working with clients where you’re not just talking about performance, but you’re actually delivering and sharing the value you’re providing them? For example, for advisors who use our tax-harvesting strategies, we have a quarterly report that’s in clear, client-friendly language about the benefits of what we’re doing there.
The second is bringing more assets on platform. So for those advisors in our ecosystem that are RIAs or have advisory business, winning that business off other TAMPs is a big area of focus. We’re continuing to improve our platform so that we win that business. We’re also helping our advisors retain their clients and continue to have better client reviews and better client meetings through different technologies that we’re building.
Lastly, we’re focused on recruiting new advisors, not just on the insurance side, but on the wealth side. We’re starting to see a lot of success and interest from advisors at independent broker/dealers, other RIAs, where they really want a growth partner, and we’re able to help them grow their business and then help them build their wealth management business as well.
