3 Keys To Maximizing Your Firm's Value

Competition is intensifying for Registered Investment Advisor (RIA) firms looking to acquire assets and market share across the independent wealth management landscape. As the industry continues to face consolidation, the gap in performance between super ensemble firms and small RIAs is widening—driving firms of all sizes to ask themselves, what is our value?

According to the 2018 Pricing & Profitability Study1 conducted in partnership between Investment News and BNY Mellon’s Pershing Advisor Solutions, the data is clear: large firms are not only getting larger, they are also continuing to win the market’s share of high-asset clients. As a result, we have seen an increasing direct competition between smaller, independent firms. In fact, the study shows that about a third (34.6%) of RIA firms’ new clients in 2018 were acquired from competitors. This trend has escalated significantly: in 2015, only 10% of new clients were won over from other advisors.

These statistics confirm what we already know: that complacency is detrimental for firms looking to grow, or even maintain, their client bases. Why? Customers today are equipped with the tools and information at their fingertips to assess what the rest of the industry has to offer. As such, it is extremely important that advisors seek guidance to help them refine their value propositions.  

As we begin 2019, there are several actionable steps we believe firm owners can take to establish a strong foothold within the industry. We see these as paramount to identifying, shifting and potentially maximizing their value so they can subsequently grow and scale their offerings. 

1.) Always be changing

One of the biggest deterrents of growth at any firm is the refusal of leadership to evolve their ways of thinking. Think about it this way: a portfolio manager would never base their investment philosophy on research that is 30 years old when there are updated studies available. So why, as a firm owner, would you base your client offerings on a decades-old consumer marketplace? As technology evolves, so do client expectations. As such, your firm should follow suit—or risk facing obsolescence.

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