Osaic President Shannon Reid: How We're Shifting From Consolidation to Growth — Barrons.com

By Steve Garmhausen

When Osaic, one of the largest independent broker-dealers, first approached Shannon Reid about taking a leadership position, she was resistant — she was approaching two decades of service at rival Raymond James and was happy there. But as Reid learned more about the position, as president of Osaic and head of advisor growth and engagement, "it just became too compelling to pass up," she says.

Speaking with Barron's Advisor, Reid says the Scottsdale, Ariz.-based firm expects to keep its 7,000-plus financial advisors ahead of the curve by continually adding cutting-edge technology. While praising the combination of Osaic's 11 broker-dealer's into a single entity — with most of that work done in 2023 and 2024 — she says the $700 billion-plus-asset business still has to live up to its potential. Lastly, she argues that artificial intelligence chatbots won't compete with human advisors for advisory clients; instead, they will reveal the value of human advisors.

You were hired about six months ago for a newly titled role that used to be part of CEO Jamie Price's job. What was Osaic's strategic reason for this change? About a year ago Osaic finished this exercise, "Journey to One," to bring its 11 separate broker-dealers and registered investment advisors together as one. It really created a completely different organization, and now as a firm we're looking forward to building the Osaic of the future. We believe being one firm makes us so much stronger and gives us so much more potential to meet advisors where they are and solve advisor problems, both individually and across the entire platform. I think it was with that thought in mind that the president role [previously held along with the CEO role by Jamie Price] was separated out.

It seems like Osaic is shifting from several years of consolidation and reorganization to more of a focus on growth. Fair? I think that's right. We're focused on building out the vision of what Osaic will be in the future as one firm. We have a perspective that aligns everything around it. What are the investments we're making? Who are the people we're hiring? How do we engage our advisors across the different affiliation options? Women advisors? Next-gen advisors? High-net-worth advisors? There are all those different elements of being one firm with one common experience, and being able to deliver a much more consistent and effective product set.

Can you say a word about your decision to leave Raymond James after the better part of two decades? It was a hard decision. I had a wonderful career at Raymond James; they were very good to me, and I think it's an exceptionally good firm. I think I made some important contributions. When the Osaic opportunity came to me I frankly was pretty resistant at the beginning, because I was happy at Raymond James. But I've known Jamie for several years. We sit on the Financial Services Institute board together, and I know a lot of people who know Jamie.

The more Jamie and I spoke, and the more I talked to other people at Osaic and on its board, the more interesting the opportunity became. A lot of the discussions were about where the industry is going, what was going to be valuable and important five years from now, and how we build that.

I had never worked at a firm that was not self-clearing, so that was new to me. I thought about the flexibility of not being self-clearing, and the ability to leverage partner firms like Fidelity, BNY, Envestnet, Schwab, and others, as opposed to having to come up with all of the [tools and innovations] and build them all ourselves; I thought that was particularly compelling.

Our private-equity owners, Reverence, have a very long-term view on the business, and we just announced a new long-term investment in the firm. All those things were really interesting. It just became too compelling to pass up, and I felt like if I didn't take the opportunity — with, by the way, a team of people who were energizing through all of those initial discussions — then I would regret it.

What must a future-proof Osaic look like? I think the hallmarks of future Osaic include flexibility and adaptability. We don't have to build the whole custodial platform, so that's an advantage. We build an integration layer, and it is much easier for us to adapt that and plug in partners than it is for a lot of our competitors who are self-clearing, who have more fully integrated tech stacks. So I think that's going to be a key factor.

What I know about this industry is that personal connection is going to become more and more important as people interact more with technology on a daily basis. When it comes to difficult and truly personal decisions, they're going to want close partnership with financial advisors who can help them navigate those decisions. But the way financial advisors help clients do that is going to change. The technology is already changing: Documentation and notes used to take 25% of an advisor's time. Firms like Jump and Zocks and GReminders and Zoom AI have eliminated a lot of the administrative work.

The ability to put more information in advisors' hands about how to select investments, how to connect clients to the right services, resources, and products all will become easier. So you want a partner who can plug in new technology quickly. I think our ability to quickly add new players that bring new capabilities, in a compliant and protected way, gives us a big advantage.

Two of your goals are to recruit more advisors and to boost organic asset growth. What's one key to successfully achieving each? Our first and most important job is supporting our existing advisors. But the growth of the firm is really important because of the need to continue to invest. From the perspective of attracting high-quality advisors to the platform, I think they want a firm that can adapt and grow with them. Demonstrating our flexibility in working with outside parties, and ultimately demonstrating that we can help our existing advisors grow, are key points of how we attract and recruit more advisors.

On the side of our existing advisors, the low hanging fruit in organic growth is freeing up time and being as effective and consistent as we can in helping them serve their clients. Taking friction out of the process is step No. 1. Finding time to grow is a challenge for advisors, so if we can give them time back, a lot of them will choose to grow.

I ran practice management at Raymond James for several years and did a study to understand the secret to helping a financial advisor grow, trying to see if there was a silver bullet. What came back essentially is that there is no single silver bullet to advisor growth; they all do it differently. The only silver bullet is helping them choose an action, whatever it may be, and then helping them take it. In some cases that may mean we deliver it directly. Maybe it means we connect them to a coaching program or a resource program that can help them deliver it.

Do you think AI will end up being a double-edged sword — boosting advisor efficiency but empowering mass-affluent households to be their own advisors? I see your point, but I disagree. I think people could and would be doing that probably for the last 10 years if it were the case. When robo-advisors came out, we all said they'd be the death of financial advisors.

You're right that with the right tools, people can do all of this today. The reality is that they don't. The more I think about it, the more convinced I am that relationships, while critically important today, will become even more important in the future.

There's a difference in the relationship a financial advisor has with a client and a relationship with an attorney or an accountant. Your attorney or accountant is generally solving a problem you have at a particular point in time.

I think AI is going to really have impacts in some of those industries. Because laws are written laws. The tax code is written and published every single year. So a really good AI tool can look over the breadth of all your assets and tell you what you should do. Some people will still want an accountant, because if they get audited, they want an accountant to help them.

A financial advisor covers so many personal topics with clients. They might talk about their families, about long-term care — not just retirement — about children with special needs. I don't think that's easily replaced.

A friend of mine at Raymond James says, and I completely agree, that the work a financial advisor does is on par with what a doctor, a rabbi, or a priest might do. The level of intimacy between a financial advisor and their clients when it's really working is at that same level.

When is the last time any of your friends sat down with you and told you how worried they were about money, paying their mortgage, or what they're getting paid? People don't talk about it. The only person they can talk to about it is their financial advisor.

One other point: If all of us did everything the machine told us to do, I would listen to my Apple Watch at 12:50 every day and stand up. I do it probably 40% of the time, but the other 60% I ignore it. If my husband called me and said, "Shannon, stand up," I'd probably be irritated with him, I'd probably say, "I'm not going to stand up," but I'd be standing up while I told him that. I think AI is going to push more people toward wanting personal advice.

To what extent are all the parts of Osaic now harmonized into a single, well-oiled machine? We are absolutely still working toward the idea. We'll never be done with that, to be clear. It's never going to be perfect. We're always striving to improve. But I do think we are significantly over the hump, and we see that in our own advisors' feedback to us about how things have improved.

I was in an advisor's office today, and she said they'd had to just give Osaic grace for a year. She said, "We understood and believed in what you were trying to do." And financial advisors don't have to do that; independent business owners don't have to do that. I'm so appreciative of them sticking with us through a difficult time.

Now, it is incumbent upon us to deliver on that promise. And I think we are well down that path, but we are still building the firm of the future. There's more to come to make sure we have all the right resources, the right people, the right investments, the right partners. The evolution is not complete.

Can you share numerical growth goals for next five years? Not really. We have number targets, but fundamentally what's going to help us hit them is being the best possible firm for our advisors. It doesn't get any more basic than that. Executing is complicated, but I think the picture of success isn't. I believe that success will come by doing the right thing.

So there's no bulletin board with "$1 trillion" written on it and circled three times? [Laughs] No, not right now.

Thanks, Shannon.

Write to [email protected]

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.