Investors expect more services and expertise from their advisors than ever before. Many smaller RIAs have struggled to keep up with this growing expectation and the competition from larger, elite RIA firms. In the wake of COVID-19 market disruptions, merger and acquisition activity is increasing. To stay competitive in the face of these challenges, smaller RIAs need to learn from and adapt to the strategies employed by elite RIAs. Here are a few ways these larger firms play to their strengths and how firms of any size can too.
Building Teams for a Better Client Experience
Traditionally, the wealth management model consisted of a single advisor serving a client for their journey. Many RIAs still operate this way and build relationships with their clients. However, this strategy makes transitioning relationships difficult and creates an “always on” service atmosphere for the advisor.
Many elite RIAs have shifted to a team model, where clients enter the firm through a “brand first” journey and are served by several advisors with different expertise working together to help customers meet their goals. At Merrill Lynch, 75% of their advisors have teamed up with other advisors, according to Barrons.
The team model is becoming more popular because not only does it expose clients to a broader range of specialties and opportunities, but it allows for seamless succession planning when advisors retire or move on from the firm. This is important as many firms are faced with the challenge of an aging workforce. Over $2.3 trillion in assets are managed by advisors 60 and older, and the average age of wealth advisors is around 51. Younger advisors benefit from the team model as they can work directly with mentors and older advisors. As a result, investors become invested in the firm as a whole rather than one individual.
Empowering Everyone to Do What They Do Best
Today’s investor has a diverse set of needs—from investment to insurance, the range of topics that wealth advisors are expected to be experts in is growing. In many cases, it’s too much to reasonably expect from one person.
InvestmentNews’ 2020 Elite RIA Study shows that elite RIAs have invested in building specialist teams to offer deep personalization and support for their clients. Beyond just services to clients, employing specialists to handle business operations and development allows advisors to perform the tasks they’re best suited for. Marketers, technologists, and other business professionals help provide the support and polish that the RIA needs to draw in new business.
Source: INResearch 2020 Elite RIA Study
In addition to specialized in-house employees, elite RIAs outsource other business functions in coordination with their strategic plans. Rather than spend lots of time and labor on building sophisticated platforms or technologies, they integrate tools into their systems to get up and running faster.
Adopting Scalable, Sustainable Strategies
Elite RIAs are in acquisition mode. According to INResearch, “Over the next year or two, Elite firms are significantly more likely than others to acquire another advisory firm, add another adviser and his/her clients, open an office in a new region and to enhance client acquisition strategies.”
These firms can complete these acquisitions and expansions because they implemented scalable, sustainable business strategies that can see them through periods of rapid growth. Advisors are able to come on board and pick up work easily; and as firms acquire new specialists and advisors, they can offer a wider range of services, fee services and expertise.
RIAs of all sizes can benefit from the same strategies elite RIAs use to grow their business. Utilizing the power of teams, centering the client experience, and outsourcing where possible will allow even smaller firms to scale quickly and attract wealthier and more diverse clients.
Ryan George is the Chief Marketing Officer at Docupace. He is responsible for the company’s brand awareness, early-stage sales pipeline, content strategies, customer and industry insights, internal and external communications, design, and events. George actively engages in leadership roles in both the financial services and marketing communications communities. He a member of the Forbes Communications Council, an invitation-only, fee-based organization of senior-level communications and public relations executives, the CMO Council and the CMO Club.
