The new economics of wealth management: Stirlingshire’s advisor-first approach

Today we’re examining the evolution of asset management and financial advisory services. As technology transforms how we invest and manage wealth, we’re exploring the critical balance between innovation and human expertise.

We’ll discuss how disruption in the advisory space creates new opportunities for clients and advisors alike, why personal relationships remain essential even as AI expands, and how progressive firms are reimagining compensation models. We’ll also look at the hybrid approach resonating with next-gen clients who want both self-directed tools and personalized guidance.

Joining me to explore these topics are Steven Woods, CEO and Founder of Stirlingshire, and Jim Webb, VP of Investments. Their firm is working to remake the asset management model for both clients and advisors. Today, we’ll hear about their non-traditional approach to wealth management, how they’re balancing technology with the human touch, and why this matters for both financial professionals and their clients.

Challenging the Traditional Asset Management Fee Structure

Steve Wood founded Stirlingshire to reimagine how advisors are compensated. Instead of the typical model where firms take substantial cuts from advisor earnings, Stirlingshire allows advisors to keep 100% of asset management fees and commissions with zero expenses. This creates a win-win where clients pay less and advisors earn more. “Every single advisor keeps every penny that they generate in asset management fees and commissions, there’s zero expenses to them whatsoever. And so that’s how I began to think about it.”

The “Advice on Demand” Innovation

Stirlingshire is pioneering a third option between fully-managed portfolios and self-directed investing. Their “advice on demand” model allows clients to self-direct at zero commission while having access to professional advisors when needed. The key innovation is that advisors only get paid when their specific recommendations result in profits. “What this has allowed us to do, this has allowed us to build technology that allows us to offer high level, personalized professional advice from licensed individuals in an on demand basis, and tie the compensation that’s being paid directly to the outcome of the specific advice that’s being given.”

Technology-Enabled Compliance and Remote Work

By building compliance directly into their technology systems, Stirlingshire has reduced overhead costs dramatically while increasing flexibility. This allows the firm to operate remotely, eliminate real estate expenses, and reduce compliance staffing. “We could build systems. Programs that allow us to kind of automate a lot of the compliance processes and build a lot of the compliance infrastructure directly into the code itself. Then it could help us do a couple things. Number one, it can help us move everybody to a permanent remote environment, right? So we can get rid of the real estate footprint.”

AI as an Efficiency Tool, Not a Replacement

Stirlingshire views AI as a tool to make advisors more efficient rather than replacing them. Their AI tools provide quick portfolio analysis and market context but don’t make direct recommendations or trades. “Until the SEC and FINRA really lay out guidelines for how AI can be used to make recommendations…we’re limiting it…it’s not actually making trades and doing things for us. For example, you can get in, you can say, tell me about Mr. Jones’s portfolio over the last quarter. What happened, right?…it’ll in three seconds, be able to spit you out a really detailed breakdown.”

Disrupting the Industry to Drive Broader Change

The ultimate goal isn’t just to build a successful company but to force change across the entire financial advisory industry. Similar to how Robinhood disrupted commission structures, Stirlingshire aims to push other independent firms toward more advisor-friendly compensation models. “Our goal is to hire 5000 advisors over the next five years…there’s probably that many people in the industry that want 100% payout and 100% flexibility and inbound clients…if we can make that impact at the LPL and the osaics and all these other firms drive them up to a real 100% payout…then I’ve done what I’ve set out to do, which is improve the world and the financial services world.”

The Big Ideas:

• Challenging the Traditional Asset Management Fee Structure: Stirlingshire allows advisors to keep 100% of asset management fees and commissions with zero expenses. This flips the traditional model where firms take substantial cuts from advisor earnings, creating better economics for both clients and advisors.
• The “Advice on Demand” Innovation: Stirlingshire offers a hybrid model between self-directed investing and full management. Clients can self-direct at zero commission but access professional advisors when needed, with advisors only getting paid when their specific recommendations result in profits.
• Technology-Enabled Compliance and Remote Work: By embedding compliance directly into their technology systems, Stirlingshire eliminates the need for physical offices and reduces compliance staffing. This automation significantly reduces overhead costs while increasing advisor flexibility.
• AI as an Efficiency Tool, Not a Replacement: Rather than replacing human advisors, Stirlingshire uses AI to make them more efficient. Their AI tools quickly analyze portfolios and provide market context, saving advisors time without making actual investment decisions.
• Disrupting the Industry to Drive Broader Change: Stirlingshire aims to force change across the entire financial advisory industry, similar to how Robinhood disrupted commission structures. Their goal is to push other independent firms toward more advisor-friendly compensation models by demonstrating a successful alternative approach.

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The Origin Story of Stirlingshire

Steve Wood: The origin story is basically, I started in the industry as a 26 year old intern with the GED that, in itself, is a whole backstory. So I didn’t necessarily start off at your your Goldman Sachs or any of the, you know, high flying bulge bracket banks. And so I kind of started in a smaller boutique. And that side of the industry, you know, pounding the phone $500 a day type situation. And through my experience of starting the place like I did, I got to see a lot of lot of the nefarious side of the industry, right? And so as I progressed, and, you know, I kind of had to start where I had to start, right? As I progressed and became a, you know, a decently successful advisor, I just always kept thinking about, how do we make this better? How do we make this better? I thought, you know, the big guys must be doing something, you know, that we’re not. And to an extent, yes and no, because at the end of the day, what a lot of those folks are doing is their closet indexing, right? And they’re, they’re kind of trying to stay around the market. And their number one goal in life is just don’t lose a client, right? As long as you don’t lose a client, and when the market does great, you can say, Oh, I’m doing so great. And when the market does bad, you can say, oh, it’s the markets fault. The entire time. What they’re doing is they’re basically skimming 1% of their clients assets off the top of their you know, off the top of their accounts every every year. So I really just thought, you know, how do we make this better for everybody? Like, how do I how do I improve this for advisors, and how do I improve this for clients? That’s kind of the genesis. And then along the way there was, you know, a couple big events, such as COVID, that kind of really gave me the ability to, you know, going to go forward with it. We got to do it right now. So that’s just how it all started.

On Closet Indexing and Industry Practices

Jim Webb: Well, yeah, it’s an extremely low bar. And you know, realistically, where’s the value add. So if, if, if you’re better advisors, truly advocates for their clients, and they’re truly trying to do better, not just keep clients. I was in the Union space for many years, and that was a lot of it was just basically, don’t do worse than the index and and retain your book. But for your average investor, I think you need to do better and and certainly, just the whole idea of being net above the index after charging your 1% is a challenge enough for a lot of folks.

Traditional Broker to Financial Advisor Evolution

Jim Webb: Well, certainly was for myself. I came in a more traditional channel. I was started at Merrill Lynch in 1979 and basically, what seemed to be really cool thing to be able to deal with investments when I went in the training door, when I exited it out of New York about six months later, was I’ve become a really good salesman of financial instruments. And I was 25 years old, and that didn’t seem like. That was going to be where I want wasn’t where I wanted to be. So I went in immediately to into organized gambling, which was at that time, trying to turn $1 into $10 using just strictly option purchasing. And being in Hawaii at the time, you know, eight, eight and a half times out of 10 people lose all their money. And that’s the great thing is say with options, you can only lose 100% of what you invested so, and that was, you know, a selling point well, for the Chinese and young military that wanted to do that, and two times or one and a half times out of that, that they might make $10 was enough of the thrill. So again, at 25 I wanted to latch on to something different. So I called organized gambling, because it was very organized, and it was much, much like gambling, but from there, you morph into better ways of being the house, being on the other side of the trade, and actually turning it into an investment strategy, as opposed to just straight speculation. But yeah, that was the origin story for virtually everybody of a certain age coming into the advisory space.

Stirlingshire’s Business Model

Steve Wood: Sure. So first and foremost, I came from this from the advisor side as a decent producer doing a couple million dollars a year in production, and I just couldn’t understand why I was paying half a million dollars to go to work whenever I was doing all the asset allocation, all the client acquisition and things like that. So I did a deep dive into the model, and I realized a couple things quickly that I didn’t know previously. Number one, they weren’t just keeping half a million of my front end, which is my asset management fees and commissions. They’re also making about another half a million on the back end, through margin interest, the sweep program and fully paid stock lending. So at this time, I realized, you know, I’m a decent producer. I’m keeping 1.5 they’re keeping a million dollars like that’s there’s some disconnect there for the for what I’m actually receiving from my firm. So I realized that we could build systems. Programs that allow us to kind of automate a lot of the compliance processes and build a lot of the compliance infrastructure directly into the code itself. Then it could help us do a couple things. Number one, it can help us move everybody to a permanent remote environment, right? So we can get rid of the real estate footprint. It can help us stop a lot of bad things from happening before they happen, which means we don’t need to set aside as much money to deal with problems, and we can have less compliance officers on staff, which means less less overhead. So basically, I came at this thinking, How do I get to keep every single penny in asset management fees that I generate? Right? That that was my initial thought. So, you know, we built technology allows us to do just that. Every single advisor keeps every penny that they generate in asset management fees and commissions, there’s zero expenses to them whatsoever. And so that’s how I began to think about it. And then I thought, you know, that just makes the things better for me. Like, how do we make things better for for clients in general? Because, yeah, building a business that has 1000s and 1000s of advisors bringing their clients on board. Yes, that’s a billion dollar business, right? It’s a billion dollar market cap business. But you’re not going to get to the 10s of 10s of, you know, or even $100 billion market cap by just doing that, right? You’re going to get there by how do you structurally improve the actual asset management for clients and how we do that, it’s like just dismantling it in general. So instead of just coming in and just paying, you know, 1% a year across your assets, yes, we do that, we can fully manage that. But whenever we think about the younger clients who are going to be signing up 30 years old, starting to make a lot more money in their career. Maybe inherit some money. If I inherit a million dollars today, I have two options, basically. Option number one, do I put it at Morgan, Stanley, Merrill Lynch, pay 1% a year, whether it’s up, down or sideways? Option number two, do I fire it into my Robin Hood or weeble account and trade it myself, or use one of the robo advisors, and pay half or a quarter of a percent or whatever it is, right? We do both of those things, by the way, right? We do both of those things very well. But what we do that everybody else doesn’t is that third model, which is in the middle, right? This is a professional advice on demand, right? So you can put, put your money into Sterling share. You can self direct at zero commission, like the other self directed firms. The differentiator is, every single one of those clients is allocated out to a real professional like Jim, right? And most of the time they’re not going to use Jim, but they can call Jim up. They can say, Jim, you know, 100,000 cash here, what do you think I should do? Jim says, I think you should do X, Y and Z, right? It gives them a hyper personalized recommendation specifically for that person. Person looks at it, hits the confirm button, which routes the trade out to the market makers. Now that advice hasn’t cost the client anything at all, right? They’re not paying Jim for that advice. The only time they actually pay anything is in the future, when they sell that specific position for a profit, there’s a small commission on the sell side, which Jim actually keeps 100% of right. And so what this has allowed us to do, this has allowed us to build technology that allows us to offer high level, personalized professional advice from from licensed individuals in an on demand basis, and tie the compensation that’s being paid directly to the outcome of the specific advice that’s being given. So rather than paying 1% of their entire portfolio or a quarter percent, they might pay 1% whenever we’re selling a position that the advisor told them, hey, I think you should buy this right? So that’s what we do that’s a little bit different, and lowers the overall cost to the clients, and while allowing them the flexibility to self direct. And then listen, if they get to a point where they say, I don’t want to do anything, Jim, you know, Jim, just do it right. Then Jim can, you know, move everything to the fully managed side. And then, you know, we have 120 different firms piped in, Black Rock, JP, Morgan, all sorts of other firms, where we can use models that they built. So either Jim can build models himself, or you can outsource to some of the best and brightest in the business. And, you know, kind of given everyone the ability to operate within the regulatory framework that vendor and the SEC have laid out, and just kind of operate their business from a client or from an advisor standpoint in any way that they see fit.

Handling the Cold Start Problem

Steve Wood: What we what we seen, right? We’re obviously a startup, and we’re one year. You know, 16 months out of stealth. Now, right? Phase one of the company was, hey, let me get everything set up. Let me get 4050, advisors in the platform, and then we’re going to go out to the world and start marketing for the inbound clients. Because I think today, I couldn’t start driving inbound clients into the platform and offering advice on demand if I didn’t have that supply of advice. So really, right now, we’re just now starting to turn that corner, to go out and start driving clients into the platform, because without the advisors in the platform, then we’re just another E trade, right? And we’re never going to beat them at that big mess. So that’s kind of where we’re at right now. We’re beginning to go out and let the world know that this exists previously, it was letting the world know that, hey, we can pay you more than every other firm in the industry. And now it’s, Hey, we have this new model. Come check it out. We think you’re going to love it.

Steve Wood: Yeah, the original, the original pitch is here, we’re gonna pay you run your business like you always do. We’re gonna pay you more, give you the flexibility to work wherever you want. And now it’s becoming now, now people within the industry kind of are beginning to understand that. They’re beginning to seek us out, which is great. That’s awesome. I will start spinning now the pitch is becoming, hey, in addition to all of this, we’re going to help you get clients as well. Because Jim can tell you, you know, the hardest thing in the entire industry to do is to get a client right. Once you have the client and everything else is kind of a little bit easier. That’s, you know, a lot of times people’s number one struggle in the industry is actually gaining clients. So if we can solve for how do we get clients for advisors. And couple that with here, I’m going to pay you more, then the fly will really begin spinning from both directions. And then obviously, clients began going out to their friends and saying, Hey, I have this service at Sterling share where, you know, I’m only paying my guy if he actually makes me money.

AI and Financial Advising

Steve Wood: Sure. So I’m gonna let Jim talk about this, because Jim is actually in he’s one of the few advisors that have been testing out our AI tools. Maybe he can talk about his experience using them so far. So we have them, and they’re coming down the pipeline pretty quickly.

Jim Webb: So I think realistically, for your your better advisors or advocates for their clients, and just to back, backtrack a little bit here, in terms of the appeal of sterling Shire and What? What? What grabbed me, sure, 100% payouts. Great. I was on a 90% payout in my prior firm. And I was at a firm that had a unique model, that about 20% of us were limited partners of the firm. So was, frankly, not looking particularly for a change. But what grabbed me in the Sterling shiner approach, beyond, you know, a little higher payout secondarily, is, you know, most advisors, particularly old dogs like myself, hate to be nickeled and dime on admin fees and, you know, insurance and all these things and and Steve’s model basically means that we don’t start out each month, you know, $1,500 in the hole just on fixed fees or fixed costs. So that was an appeal. But the big hook for me was a lot of you know, in the traditional brokerage channel, basically, you were an employee and the client was owned by the firm. You were owned by the firm and except you were on the same side as the firm and most of most transactions versus the same size the client, because you’re both were playing this game of, don’t do anything that will cause any pain, ie, you know, litigation or something of that nature. So you sold the approved products and all those things. Then you go into the Indus independent space, and you no longer have the employee model. But more and more independents were starting to gravitate towards the old, traditional wire house approach of risk management wasn’t risk to the client, it was risk to the firm. So bottom line is, I’m sorry, I had a phone call come in. Bottom line was that you were no longer an advocate for the client. Steve. Women’s approach immediately resonated with me that I would be able to use a unique model that I have in a manner that with instruments that were somewhat new, that some of the independent firms were looking at and going well, we’re not sure about the suitability, so if we’re not sure about it, we’ll just kick it out. And there’s a lot of lot of new things that have come out in the last two to three years that are income generating, that are just blow people away relative to what was available. So bottom line is, I think some of those things are certainly available because of ai, ai in the in the in the sense, from a user standpoint, such as myself, is a great screening tool to basically do some of the early math and eliminate some of the players so that you can get down and apply your expertise to a much smaller number. Secondarily, the AI that Stevens brought into place for me and a few others in our in our beta test here is to allow us to just pull out that what’s going on today, what happened right now? Type of information, that we can do it in a contemporaneous manner. And, you know, quite frankly, sound like we know what’s going on at times, and that that’s critical. If you’re managing somebody’s money, you you need to to have a sense that, listen, don’t stay away from the ledge. I’ve got this. This has happened before. It’s a little easier for me, after 46 years, to get away with that, but from the younger people, not so much. And the AI tool is essentially, is a robust database that is attached to all things going on in the marketplace and attaches to the actual client’s account as well. So it says. And this is affecting you because of x, y, z, the idea of AI saying, Hey, I AI built me a portfolio. No, that’s, that’s not there yet. And it just, there are just too many variables, frankly, for that to survive litigation on in the long term, in my opinion.

Steve Wood: Until, until the SEC and FINRA really lay out guidelines for how AI can be used to make recommendations, because the end of the day, each individual IAR and firm has the responsibility for the recommendations that are being, you know, made, and so until we understand really the framework of, you know, the computer says this, and here’s how a human says, Okay, this is actually good. We’re limiting it not to it’s not actually making trend, making trades and doing things for us. For example, you can get in, you can say, tell me about Mr. Jones’s portfolio over the last quarter. What happened, right? And what would you suggest in order to reduce risk and increase return? And it’ll in three seconds, be able to spit you out a really detailed breakdown of what happened, you know, and so forth. And really just makes the advisors work much more efficient. So instead of taking 20 or 30 minutes to break all this down, it does it in seconds for you, and that’s what we’re using AI to do, is work a lot quicker. And you know, obviously the advisor needs to look at what the system is presenting and make sure it’s not hallucinating and not coming up with some crazy stuff. But then we will eventually get to a situation where we have the capability to, you know, utilize it a little bit further in the process. That’s what we’re doing right now, is we’re making everybody, everybody quicker and and more efficient.

Retaining Talent in a Changing Market

Steve Wood: So I don’t know what everybody else is thinking about retention. I am a broker protocol firm, right? So they’re able to leave with their clients anytime they want, and for any reason, at any at any given time, right? So how I think about retention is we need to build a better product than everybody else, and if we do, we’re going to be able to retain and attract top quality talent. And if we don’t, then we’re going to lose it, right? And that’s and that’s my fault. So I’m I’m not trying to prevent people from leaving. I’m trying to encourage them to come. And if I, if I give the all the tools necessary to operate their business, I give them more money, and I give them clients, if somebody can take them away. For me, good. I might consider joining them too. That’s what I think about it.

Jim Webb: And your better advisors can can sniff out pretty quickly whether or not this is going to be a black hole once they get there. You know, the typical today, you were a prospect, or yesterday, or prospect today, you’re a client, type of wake up once you’re there. And Steven has been very transparent in terms of, look, if you think there’s a better opportunity for you and your clients, you know, really as a as a shepherd for them, you need to take that move. But if the focus is on allowing your your advisors to be the best advocates that they can be for their clients, the economics take care of themselves and so artificial things to keep people right.

Steve Wood: We’re not building this to be the most profitable RIA in existence, right? We’re not gonna make we’re not going to blow everybody’s doors off with, you know, our margins right at the end of the day, we’re going to be towards the bottom right. So this is, this is a scaled business, right? Our advisors cost a lot every single month. But my belief is, if we’re able to structurally change the asset management model for the better that everybody who’s involved in this is going to do very, very well. And at the end of the day, I think you can think about how Robinhood changed, the discount broker dealer, you know, you think about 12 years ago, everybody’s paying $20 a trade Robin Hood came out. They said, You know, we’re going to charge zero. Everyone said, Oh, that’s kind of ludicrous. And then over the next 10 years, every single self directed firm changed their model to, you know, kind of suit what I kind of do, what Robinhood was doing, and that’s our goal. Here is to go after, you know, listen, at the end of the day, we’re never gonna be able to drive JP Morgan, Morgan Stanley, to 100% payout. Right? Most Beloved banker in the entire industry is Jamie Dimon. If he came out tomorrow and said that 10s of billions of dollars in asset management fees that we keep from our FAS every year. We’re gonna let them keep that like everyone loves them, put their dividends Gone Tomorrow the company, they can’t service it down on all the real estate, right? And then he gets broad marched out the front door. So we’re never gonna drive them to 100% but if we can make that impact at the LPL and the osaics and all these other firms drive them up to a real 100% payout. And, you know, kind of, kind of bring that advice on demand model to the independent side of things. Then I’ve done my then I’ve done what I’ve set out to do, which is improve the world and the financial services world, and that’s more important than making my next billion dollars, right? If I, if I’m able to do this along the if I’m able to be successful and drive the model forward, then the money is going to come.

Looking Forward: Goals for Growth

Steve Wood: So biggest goal for this year is, you know, we hired 40 advisors last year. Our goal is to hire 260, more this year, 100, so that that’s our goal for this year. We’re laser focused on that. We’re doing a series a in order to begin to, you know, really ramp up that inbound client flow, right? We got to get our message out. It costs, sometimes costs a little bit of money to get out there and let the world know what exists, right? So the series A is important to help that. And then, you know, over the next five years, our goal is to hire 5000 advisors over the next five years. So this, you know, 620,000 or so in the industry. And that’s, we think, a very feasible, very large, but feasible goal that there’s, there’s probably that many people in the industry that one 100% payout and 100% flexibility and inbound clients, right? So if we can solve those, I don’t think getting the 5000 advisors is a problem.