Is scale a necessary evil in wealth management?

What do Morgan Stanley, Schwab, Edward Jones and Creative Planning have in common? 

Diamond Consultants

At first glance, not much. But look more closely and the wirehouse, custodian, broker-dealer and RIA share one characteristic: scale. The biggest fish in their respective ponds, each has leveraged size to solidify their standing in a rapidly evolving wealth management industry.

“Scale” is one of those buzzwords that gets tossed around as an unquestioned good. And there’s truth to that — it can bring real benefits. But it’s also worth asking: Is scale good for advisors? Or is it just good for the firms and their stakeholders? Let’s look at both sides of the coin.

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The benefits of scale in wealth management

Size creates undoubted advantages, especially in the tech-enabled world of wealth management, where margins are under pressure, client expectations are on the rise and competition is fierce. Here are four advantages to scale:

• More capital, more investment. Larger firms have bigger budgets to invest in technology, platforms and talent. That can translate to better tools, more efficient processes and access to expertise that smaller firms simply can’t afford. 
• Volatility buffer. Whether it’s regulatory fines, a drop in interest rates or a market downturn, firms with scale are often better equipped to weather the proverbial storm. That stability can be a major plus for advisors seeking consistency and long-term security.
• Playing the long game. Scale enables firms to think beyond the next quarter. That means they can make long-term strategic bets that benefit advisors and clients alike, whether it’s investing in AI-driven tools, acquiring talent or building new service models.
• More value at lower cost. In theory, scale allows firms to deliver more for less. Larger firms can spread their costs across a broader base, driving down prices for end clients and increasing efficiency for advisors.

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The case against scale

Still, bigger isn’t always better. From the advisor’s point of view, size often comes with bureaucracy, complexity and a loss of the personal touch. Here are three anti-scale arguments:

• Big can seem impersonal. Working at a massive firm can feel like being just another number. It’s easy to get lost in the shuffle, especially if you’re not one of the firm’s marquee producers. 
• Not all benefits reach the advisor. Just because a firm is making major investments doesn’t mean those benefits trickle down in a meaningful way to every advisor. For example, a solo advisor who values high-touch service may care less about a cutting-edge investment platform and more about getting a timely answer from the home office.
• Mass compliance. In firms with a large advisor base, risk is often managed to the lowest common denominator. That can translate into rigid compliance policies that restrict entrepreneurial advisors or limit the kind of bespoke client experience they want to deliver.

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And the answer for advisors is …

So is scale a necessary evil in today’s financial services landscape? 

It may feel that way as the biggest firms continue to grow, often by acquiring smaller players or recruiting top talent with the promise of resources and reach. From the outside, it might seem like scale is the only path forward.

But the reality is more nuanced. Advisors still have options. For every large-scale platform, there’s a boutique firm offering high-touch support. For every tech-heavy solution, there’s a firm focused on old-school relationship management. And that’s the beauty of this industry: No one model fits all.

Scale has its place — and for some advisors, it’s the right answer. But for others, the value lies in autonomy, service and culture. The key is knowing what matters most to you and choosing a firm whose definition of success aligns with your own.

Because at the end of the day, scale should serve the advisor — not the other way around.