Independent Financial Advice Firms Should Look To Startups For Future Of Innovation


By Dan Sachar/ Ladenburg Thalmann

As technology-enabled service rises in importance, independent financial advisors will need to work with firms that can successfully anticipate where the industry is going in the future, and position them for success ahead of the pack.

For independent advisory and brokerage firms, there’s no better way to develop this perspective than by partnering with early-stage tech startups. Of course, this is easier said than done.

Identifying and acting on the right opportunities begins with the crucial first step of building extensive networks and connections with people on the frontlines of the startup community. From there, identifying the right trends and criteria becomes essential.


The most compelling opportunities for independent firms supporting financial advisors are with tech startups that tap into a macro socioeconomic trend, and solve financially-related pain points in a growing, addressable market.

A prime example of a macro trend is the rapid growth of freelancing – either as an individual’s primary or supplemental income – as part of the rise of the “gig economy” and “shared economy” models. In this changing environment, there is an urgent need for nimble and efficient digital tax solutions to help manage the complexities of independent income for this swelling segment of the American worker population.

This includes administrative time loss, budgeting and planning challenges posed by calculating and submitting the right amount of taxes regularly. Independent firms that collaborate closely with tech startups to address these needs, and do so in a way that seamlessly plugs into broader financial advice offerings, will deliver an undeniable advantage to their financial advisors.

On the younger end of the age spectrum, solutions for handling student debt may rise in importance as more Millennial advisors enter the field and serve Millennial clients. Meanwhile, for advisors working with employers, new talent and benefits solutions that extend beyond overseeing 401(k) assets represent another growth opportunity for the financial advice industry.


Next, it’s crucial to prioritize strategic alliances with startups that can significantly diversify the existing services that firms enable advisors to offer for their clients. While human-powered advice will remain essential to the profession, the services that end-clients receive will continue to evolve.

For instance, at one time financial advice was mainly all about investment management. Later on, advisors started more robustly incorporating planning, insurance, and trust services.

Similarly, the promise of fintech today is its potential to empower advisors to meet the growing challenges and complexity of their clients’ financial lives with scale and efficiency, across a much broader sweep of services than ever before.


Once the right opportunities have been identified, independent firms should conduct due diligence on startups, including testing new solutions with advisors and actively incorporating their feedback.

One way to achieve this is to host a highly structured annual event where the firm in question can bring together carefully selected advisors and startups. This gives startups a forum to make their best pitch directly to advisors, and empowers advisors to decide on the spot whether the solutions they offer might make sense for their practices.

Such gatherings should serve as the starting point of an ongoing testing process. Firms can build cohorts of early-adopter advisors to conduct tryouts of the tech-enabled tools, while leveraging advisor data and experiences to determine whether it makes sense to proceed with a partnership with any specific start-up.


Of course, fostering innovation via startups that benefits financial advisors and their clients does not mean interfering with fintech startups by telling them how to run their businesses on a tactical, day-to-day basis. Doing so is more likely to strangle innovation and hinder the growth potential of the new offering.

Instead, firms can add value to fintech startups by showing them how best to interact with advisors in order to expand the startup’s distribution network. This includes clarifying the priorities of the firm’s advisors to the startup, sharing insights about the advisory client base and conveying the feedback of advisors participating in any product testing process.


The financial advice industry requires constant innovation, from both firms and advisors, with an emphasis on looking across longer-term horizons to brainstorm about what the future will look like in five, 10, and 20 years from now.

That far in the future, advisors’ value propositions, fundamental service offerings, fee structures and software could all look substantially different. Those firms that partner with the tech startup community to uncover a uniquely differentiated toolset for advisors, and do it before the rest of the pack, will be ready to lead that future.

Dan Sachar is Vice President of Enterprise Innovation at Ladenburg Thalmann Financial Services, (, and Head of the Ladenburg Innovation Lab. Trent Bigelow is Co-founder and CEO of Track Technologies (, a fintech startup providing tax automation for freelance workers and others with independent income sources