John Lococo, executive financial wealth manager at First Street Wealth Advisors in San Jose, CA, transitioned to a fee-based business over 15 years ago. Here’s his story.
A 20-year industry veteran, Lococo began in the insurance business and soon realized a misalignment between what he wanted to do for his clients and what he could do for his clients. The compensation model in place limited his revenue and the time he could spend with each client.
The solution: Transitioning his business model to offer fee-based wealth management advice. It’s been over a decade since he executed his plan, and he’s never looked back.
“The biggest challenge? Pulling myself away from the narrative that fees or costs were the important things, and moving towards a narrative of “what am I actually producing for my client, and what’s the value to the client?”
As a commission-based advisor, Lococo had customers, not clients. Looking at other professionals, he saw doctors, lawyers, and CPAs getting paid for their expert guidance. However, for financial advisors like him who were operating in a commission-based relationship, everything was transactional, based on the sale. There was no recognition– tangible or otherwise–of the behind-the-scenes efforts of studying the markets, understanding how asset classes tend to perform in certain economic environments, creating portfolios, etc. Believing this approach didn’t serve him or his clients well, and wanting to deliver more to clients, he decided to change his business model to better align his clients’ outcomes with his own. One that rewarded his expertise, allowed for deeper relationships and produced a steadier income stream: the fee-based advisory model.
From a standpoint of preparation, Lococo says, “you only know what you know at that time.” He took the leap and moved forward and learned things along the way. He says, “I do think I could have relied more on AssetMark’s support. They provided us with a lot of services at the time and still do. In hindsight, I should have leveraged these resources that were right in front of me.”
Self-reflection is key. Lococo says, “Ask yourself: What is your narrative? Are fees and costs the most important thing to you? What kind of time and effort does it take to deliver services and support to your clients? Then, ask yourself what works for me? And, most importantly, is it sustainable?”
He concludes, “With the exception of advisors with huge commission-based structures that they built over the years the answer for most is: No, it’s not sustainable.”
Ultimately, Lococo says you’ve got to do what works for you. But here’s what he says about his own experience:
If you’re considering switching to a fee-based advisory model talk with an AssetMark consultant.
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