The Evolution of Advisor Networks
The growth of a $2.5 billion industry
The energy transition has created new roles for advisor networks, but they have a rich history. Bill Read, Enco Insights’ Managing Director, discusses their evolution with Paul Chapman, host of the Enco Insights Podcast.
Paul Chapman: Let's start at the beginning. What are advisor networks?
Bill Read: Advisor networks connect people who have expertise with investors or firms who need specific expertise.
It's not new to need human expertise in a commercial context. But advisor networks as a business is an industry that’s emerged in the last 20 to 30 years. Some people call it the biggest industry that no-one’s ever heard of. You could say it’s a Google for everything that’s not on Google.
It’s an industry that really started in about 1998 in the US. Over time the industry professionalised and put in place compliance processes. Fast forward to today and it's an industry globally that's worth about two and a half billion dollars. It's now a very baked-in process for public and private investors, for management consultants, for corporates, and for law firms if they want to use expert witnesses.
“Some people call it the biggest industry that no-one’s ever heard of. You could say it’s a Google for everything that’s not on Google.”
Paul: Can you help us understand how advisor networks actually work and how the different pieces engage?
Bill: I used to work at a bank, Goldman Sachs, and review a lot of decks and Information Memorandums. Most IMs would have a few pages of expert calls with people who were talking about the proposed deal, whether it was the target company or sector insights. Investment teams in private equity doing diligence on a prospective target company would want to really go much deeper - understand what that company's clients think of it, what that company's former employees think of it. The only place you can really get that is from people.
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So you go to an advisor network - which at its simplest form is almost like an Uber for advisors. You submit a request to them, and they then go out to their own networks and to the wider world and find those 50 former clients of a company and those 50 former employees who can talk about it. At it's very simplest, it's a broker for human knowledge.
Paul: How has the sector evolved over time?
Bill: It started off very much as hour-long phone calls but in recent years there have been various divergences in approach. Some advisor networks will put together banks of advisor transcripts that they will then sell on a subscription basis. What we're seeing happen more is that clients are asking for something more in-depth. Many people want to get an advisor in for a one-day workshop or a couple of days a month to really get under the hood of an issue.
There’s also a big trend now towards specialization. This is helpful in somewhere like the energy sector which is very fast moving with new technologies to understand - and some very big investment calls being made.
Paul: You've chosen to launch Enco Insights as a dedicated advisor network for the energy and resources space. Where do you see demand coming from, and why is it so crucial to energy and resources?
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energy transition with confidence
Bill: Demand is coming from both the traditional users of advisor networks such as consulting firms, investors, investment banks, law firms but also, increasingly, from corporates as well. This is because of the challenges and opportunities that so many clients are facing. There's the energy transition, the geopolitical challenges faced by companies, and the digitization of commodities.
All these are incredibly important factors but the pathways are unclear, and huge investment bets are being made. So getting human, high quality insights is more important now than it's ever been. A lot of the markets that we're looking at - like the minor metals market – are also quite opaque. There's a lot of areas that are not well covered in the public realm and where human knowledge is more valuable than what you can find on Google.
So we're about access, but we're also about building a community of talent. There's a lot of really good talent leaving that sector, and for us to capture that knowledge is valuable for both our advisors but also our clients.
Listen to Bill Read’s full Enco Insights Podcast interview on Apple or Spotify. Subscribe for regular expert advisor insights.
