RIAs to Get Training in ‘Real-World’ Scenarios

Medical interns train on cadavers, law students hone their skills in moot court and mechanics ply their trade on old machinery — all before they actually go out and execute what they have learned.

Not so with financial advisors.

Advisors don’t have access to “Monopoly money,” or “Bitcoin-like” virtual currency to play with and avoid mistakes. But a new partnership between Fidelity Clearing & Custody and The Ensemble Practice, is designed to change that with the creation of the G2 Leadership Institute.

The institute, launching in January, promises to immerse “talent in real-world simulation based by advisory firm leaders.” The goal is for aspiring advisors to make mistakes on buying and valuing advisory firms in the equivalent of a simulator — before they ever encounter real-world scenarios.

“For smaller businesses, it can be risky to offer ‘real-world’ experience on high-stakes decisions,” said Bob Oros, executive vice president and head of the RIA segment with Fidelity Clearing & Custody, in a news release.

There’s a lot at stake: $2.3 trillion in assets, to be exact. That’s the amount held by financial advisors over the age of 60, according to Fidelity, and much of that wealth will pass on to younger advisors over the next 15 years.

The idea is to make sure younger advisors know how to handle the wealth transfer as veteran advisors sell their firms or merge with competitors. Think of G2 as a “fantasy league” for advisors in which the repercussions of bad decisions don’t affect real clients.

To impart the practical training necessary for future leaders, G2 has “pulled together some of the best minds in the industry to give participants the ability to learn and strategize with them and bring ideas and insights back to their own firms," said Philip Palaveev, CEO of Seattle-based The Ensemble Practice, in the same news release.

Starting in January, 50 advisors will split into 10 smaller RIAs and the advisors will be assigned titles — CEO or chief operating officer, for example. They will face roadblocks and pitfalls that RIAs face every day, according to a post on RIA Biz, a news site devoted to RIAs.

The exercise will take about two years — remember, this is a real-time period — and the RIA teams will face scenarios ranging from huge market swings to the sudden departure of a key manager to dealing with the compliance challenges of a creaky technology infrastructure.

“I would encourage future leaders, at my own firm and at other firms, to take advantage of this program so that we can all meet the challenges this industry will face over the next 10, 20, 30 years,” said Russ Hill, chairman and CEO of Halbert Hargrove Global Advisors, in the news release.

Hill participated in the pilot program for the G2 Leadership Institute.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].