Article originally published in ThinkAdvisor.
4 Ways to Make Your RIA More Competitive, Right Now
The wealth management industry has enjoyed a decade of prosperity, fueled in large part by favorable macroeconomic trends and market performance. Between 2012 and 2021, global markets surged by an average of 14% a year, leading to a significant increase in assets under management for many advisory firms.
Unfortunately, this stretch of remarkable growth has bred complacency among some registered investment advisors when it comes to their future growth strategies.
Markets and the wealth management industry are dynamic, and firms that do nothing could be in for a rude awakening. Challenges such as the great wealth transfer, an advisor succession crisis and evolving client expectations are threatening to disrupt the status quo.
These emerging issues, coupled with an intensifying competition for clients, make it critical for RIAs to adopt and execute proactive strategies that may boost their competitiveness and success down the line.
Here are some key elements that can enable the RIA of the future to differentiate themselves today, thus securing their place in tomorrow’s market by turning uncertainty into opportunity:
1. Build an intentional culture.
An intentional and well-defined company culture is an absolute must for RIAs seeking to stand apart from peers and thrive in the future. Creating a strong firm ethos serves as a critical tool for attacting and retaining talent — and best of all, there’s no cost attached.
RIAs looking to be disruptors should remain steadfast in their commitment to continuously reinforcing and strengthening these values, which ultimately serve as the backbone of a firm’s overall strategy.
Fostering a great culture can also significantly enhance the client experience, which becomes increasingly important as client demographics continue to evolve. A strong cultural foundation might take the form of leading with a servant’s heart and a warrior’s mindset, or perhaps striving to get one percent better every day.
It’s imperative that the entire firm commits to buying into these values, from administrative and support staff to leadership. By prioritizing the development of an intentional and robust firm culture, RIAs can position themselves for long-term success.
2. Focus on attracting and retaining top talent.
Thoughtful talent acquisition and retention is another potential linchpin for growth and differentiation now and into the future. Getting talent right, whether via career pathing, mentorship or adding appropriate administrative support, can be a force multiplier when it comes to firm growth.
In fact, a Schwab study in 2022 highlighted the heightened importance of this issue, revealing that recruiting new staff had surpassed acquiring new clients to emerge as the top strategic priority for RIAs. This development signals the industry’s increased recognition of talent acquisition as a key driver of sustainable growth.
3. Be sure to have a friction-free tech stack.
A third essential element for future growth is the implementation and integrationof a seamless and integrated technology stack. This will become nonnegotiable for RIAs, empowering them to be disruptors versus being left among the disrupted.
The right tech will be an indispensable advantage for firms, enabling them to continue driving innovation within the industry. But it’s not just about adding any technology — all integrations should address the diverse needs of advisors, be additive to enterprise value and enhance the client experience.
The tech stack should encompass best-in-class solutions across important domains, spanning cybersecurity, proprietary marketing and artificial intelligence applications. Cutting-edge technology ecosystems can position RIAs to stay ahead of the curve, all while delivering a superior experience for clients.
4. Avoid obsolescence.
An abundance of challenges face the wealth management industry, marking a crossroads when it comes to RIAs’ future growth prospects. Will firms embrace new ways of thinking and thrive, or remain complacent and be left behind?
The time to future-proof an RIA is now, before disruptive forces exact a further toll on growth.
By taking bold action when it comes to proactively building a strong culture, attracting and retaining top talent and utilizing a tech stack to their competitive advantage, firms can entrench their position as enduring leaders in wealth management for decades to come.
This article was originally published in ThinkAdvisor.
