Zero Alpha Group, which is comprised of registered investment advisors, is working to leverage its resources in a more formal, strategic way.

Zero Alpha Group, which is comprised of registered investment advisors, is working to leverage its resources in a more formal, strategic way, after a recent meeting between members in Chicago paved the way for a number of new initiatives.

ZAG has been going since 1995 – long before the buzz about independence became a chorus after the financial crisis. Its members collaborated by phone and online to discuss issues that they had in common, and the heads of its member firms (which are geographically diverse) would meet once per year.

“But there was never really a forum, where they could come together and share resources. So we decided that, with the depth of resources across ZAG, it made sense,” says Katie Cullen, executive director of ZAG.

However, with the group's "Collaboration Forum," which has seen it form a number of committees made up of members, this has changed.

The group’s member firms have client assets of around $8 billion collectively, and are: Savant Capital Management, Peterson Hastings, Foster Group, Plancorp, Resource Consulting Group, Beaird Harris Wealth Management and Carlson Capital Management.

Annual forums

Having created a number of committees which will work together, and hosted its first forum successfully, the group is now planning to host these annually, as it tries to engage the next generation of advisors, operations managers and compliance specialists among its ranks.

“The founders of ZAG have known each other for over 16 years but really now the effort we’re putting forward is to engage, to bring in that next generation,” says Cullen.

The Chicago forum, the location of which was picked because of the city’s central location in the US, and the fact that Savant Capital – ZAG’s largest member – is based there, saw the marketing, integrated wealth management, investment and technology committees join forces.

Cullen says she chose these committees to populate the first forum as she saw the most “immediate” potential to create tangible projects to work on in these areas.

“Tangible” benefits

The marketing committee, for instance, is going to be creating a request for proposal for a social media consultant to engage ZAG and consult the whole group on best uses for social media and compliance.

Meanwhile, the IWM group has come up with a list of industry specialists that it wants to work with to keep it abreast of developments in financial planning, so that it can create an educational series for its own advisors.

In fact, ZAG positions itself very much as an educational resource to its own firms – acknowledging that the wealth management industry is forever changing and requires constant study.

Another initiative the group is working on through the IWM forum is a benchmark to track the client experience “more quantitatively,” says Cullen.

This taps into a major trend at the moment where firms are trying to capture client data and feed this into service models that make the whole process of engaging with a wealth manager smoother and more consistent.

“We don’t feel that it’s important that each firm is doing it the exact same way, but to have a tool like that, where we can make sure that the client experience is really as robust as it can be, will allow us to better gauge how we’re serving our clients,” says Cullen.

Exactly how this benchmark will be designed is a work in progress, with more details expected to be released as the group implements the process. It will look at collecting data points on service such as how many “touch points” a client has, and how often each client is receiving financial planning advice.

It will be comparable in some ways to ZAG’s CFO dashboard. The group has a CFO forum, and each CFO can see a dashboard of business metrics for each member firm.

Such a culture of trust is surprising. What happens when a firm goes through a rough patch, will it still share its metrics? Cullen says that she has been amazed with the openness that has been fostered within the group – and that of course, with the markets the way they have been, firms have had tough points, but have continued to share their experiences as they see the overall benefit in this.

“On the first point of contact, when a firm is interested in ZAG, it’s always something that I share with folks: you really have to have an openness to share, that spirit of transparency,” she says. “And I give examples to ensure that it is something they would be open to learning more about, and participating in.”

Power in numbers

And it’s not just ZAG, more firms are realizing the value of working together in the RIA industry to overcome some of the constraints, such as resulting from a lack of scale, or available capital to invest in softer functions such as marketing.

Looking at other examples of collaboration, on the investment side, the Wigmore Association of multi-family offices has been leveraging its global network to access more local investment knowledge in different markets. Meanwhile, Advizent was founded as a consortium to raise awareness about the independent brand.

One thing Cullen feels makes ZAG stand out is her role: she is employed full time to run ZAG. This means coordinating the various forums, planning the meetings, raising brand awareness, speaking to potential members, and so forth. “So I wear a lot of different hats,” she jokes.

Cullen joined the organization in January 2012, after a 15-year career in sales, marketing, consulting and relationship management.

Other initiatives

Other things ZAG is working on include vendor evaluation on software – looking at software integration and how various software packages keep pace with the industry – and due diligence on investment. For the latter, it will create a process that means due diligence efforts are pooled so investment partners have a scorecard that firms can reference.

“We’re also going to be putting in a lot of effort to security,” says Cullen. “All of the firms of course have security in place right now, but we want it to be the best, so that’s something we’re going to be doing collectively.”

There is a cost of course to all this: to having a full-time employee and investing in areas like social media, security, tech research and client experience. But these costs and benefits are shared – which gets at the heart of the problem faced by many RIAs when it comes to competing with larger rivals.

It also becomes part of the branding of each member firm, she says, as a way of identifying what they stand for: the fiduciary standard, and an asset allocation and modern portfolio theory-approach to investing, among other things.

“Each of these individual firms is large by RIA standards,” says Cullen, “but if we work together, whether it’s purchasing power, whether it’s getting attention, we are so much more powerful collectively.”