Mark Mettelman has spent the past 30-plus years driving institutional and entrepreneurial change across the securities industry.
HCOB: How did your experiences and success during the first half of your career form your decision to create Triad Advisors, essentially taking the industry in a new direction? Mettelman : My experiences on both the trading side of the business and the back office side told me that the needs of the independent financial advisor were no longer being well-served by the existing institutional structure of the big insurance companies and Wall Street firms. The market was evolving, with significant changes occurring in terms of compensation models, the desire by advisors to expand their offerings, access to alternative investments, etc. Equally im- portant, my relationships with colleagues across the country played a big part as well — what I was hearing from them was coming across loud and clear. HCOB: That sounds like a lot of moving parts — so let’s take them one-by-one. What do you mean by “changes occurring in compensation models”? Mettelman : The broker dealer marketplace had tradition- ally operated on a commission-based, transaction-oriented business model — brokers traded stocks and bonds and sold other financial products on behalf of their clients and were compensated for those services via a commission, a percent- age of the purchase or sale price of the entity bought or sold. Back then, if you sold your client a mutual fund, for exam- ple, you might get an 8 percent commission on the value of that transaction. As the Registered Investment Advisor (RIA) role began to emerge, advisors serving high net worth clients became interested in expanding their offerings into
this new field but were faced with an entirely different com- pensation model — a fee-based model. In this new structure, financial advisors would charge an annual fee based on total assets under management rather than being compensated on a trade-by-trade or purchase-by-purchase basis. And those fees were much lower — closer to 1-2 percent. HCOB: And there was another change occurring in the financial services market that was also at work, right? Mettelman: That’s right. At that time, broker dealer firms began being acquired by large insurance companies and other financial institutions. Those companies wanted to find outlets for the sale of their own proprietary financial prod- ucts such as mutual funds, annuities and life insurance. The financial services companies had the products, and the broker dealer firms they acquired had the clients. When these firms were bought, the broker dealers of the acquired firms had access to a new set of products, but they were required to sell a large percentage of that company’s brand- ed products. If they wanted to expand beyond the stocks and bonds they’d been trading on open exchanges, their choices were severely limited. HCOB: In fact, Keogler Morgan — the firm you were at before forming Triad Advisors — was one of those broker dealers that was acquired, right? Mettelman : Yes, we were. And I had a front row seat at how those kinds of acquisitions were faring — not only at the insurance company that bought us, but also from my rela- tionships and conversations with advisors at other acquired
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