The RIA of the Future: 3 Tips for Success

As the saying goes, the pessimist complains about the wind, the optimist expects it to change, and the realist adjusts the sails. In a recent Docupace webinar, an expert panel gathered to discuss how the winds of change have already begun rolling through the RIA and wealth management industry and how firms should “adjust their sails” to weather the storm.

The RIA industry is still in its relative infancy. RIAs only hold 26.7% of assets under management (AUM) compared to wirehouses, broker-dealers, and independent broker-dealers maintaining a majority 62.8% of AUM. The opportunity for RIAs to experience explosive growth is there, but not without the right adjustments to meet the industry’s various challenges: differentiation, succession, and innovation to meet evolving client’s goals and needs.

While RIAs are trending in the right direction, rapid change in the last five years due to political unrest, market uncertainty, and other outside challenges have accelerated both the pace of change needed for RIAs to evolve from a “coasting” model to a more proactive “adjust the sails” model.

As the great wealth transfer of $84 trillion or more in assets looms, the ability for RIA firms to take up the mantle of advisor, financial life coach, and guide for the next generation of clients is crucial for continued growth. This blog breaks down three areas discussed in the webinar where RIA firms can start preparing for the future.

1) Make Your Values Front and Center

Why do I need a financial advisor?” This question is still among the most common that advisors hear from potential clients, especially among younger generations. The currency of trust has never been more scarce, yet it remains crucial for the RIA firm of tomorrow to remain successful. How then can advisors grow their value in clients’ eyes?

The answer runs contradictory to much traditional wisdom in the RIA space. Don’t make the numbers your only focus! Especially for the next generation of investors, it’s important for their advisor to be aligned with their values. Instead, incorporate the humanity of money into every conversation you have with clients, create brand values, and then stand behind them.

What investors crave, and what ultimately builds trust, is connective questions about their money and their financial goals to tie their investments to their deeper values. The advisors who successfully connect these two together will:

Radically re-evaluate how they spend their time and resources.
Prioritize spending more time on revenue-generating activities (e.g. time spent with clients) in order to improve their client journey.

2) Focus on Talent Acquisition and Retention

Today, the number one concern advisors have is attracting top talent. Nearly 40% of the industry headcount is set to retire in the next decade, and the number of new advisors is barely offsetting those lost to trainee failures or retirements. With this grim outlook on the horizon, the RIA firm of the future has an opportunity to differentiate itself by building a strong internal culture, brand values, and experience for employees and clients alike.

The first three years of a young professional joining a firm make up the critical trial period determining their future at the company. Therefore, investing in company culture, training, and clear career paths is key to motivate (and attract) the next generation of advisors. After all, having a next generation of advisors at the firm is crucial for firms looking to attract and serve the next generation of clients.

3) Adopt a Multi-generational Approach

Ultimately, RIAs can continue as they always have and experience marginal growth or they can adopt a forward-looking mindset and ride the oncoming wave to exponential new heights. To stay relevant, RIAs should look to adjust in the following areas:

Become multi-generational. As we know, 90% of investors don’t stay with the firm of their parents. Firms who modernize their staff, support systems, and values to connect with the second generation of investors (and beyond) will find success.
Whether it’s adopting a more intentional marketing strategy, changing your 1-1 client strategy, or disrupting your current business model to explore hourly-charged advice and more personalized offerings, turning the status quo on its head can help your firm get ahead.
Adopt technology. Last but not least, RIA firms are on the cusp of the data-defining age. The next generation of advisors needs to find the opportunities with the latest technology to streamline their processes, better serve clients, and ultimately save time and resources to put toward revenue-generating activities.

PreciseFP stands out as a solution that not only streamlines data gathering but also caters to multi-generational needs, making it an attractive choice for forward-thinking RIAs. Start a 14-day free trial today and experience the benefits firsthand!