Emerging RIAs and Education

How to build a profitability model in a big-get-bigger environment

Emerging RIAs may struggle to build momentum and grow their assets under management (AUM) in an environment dominated by large firms. By delivering specialized planning services, building an ensemble team, and focusing on the right education for their people, emerging RIAs can accelerate their growth and boost their long-term profitability and sustainability.

This discussion focuses on common strategic priorities for emerging RIAs and serves as a guide to achieving long-term profitability goals. It also covers the essential role that advanced financial education plays in building a thriving RIA—an integral component of RIA support often overlooked when transitioning to an independent business model—and provides guidance on how to blueprint this approach.

While the RIA industry’s total AUM grew by 13.2% in 2020, growth was concentrated at large firms. Boutique firms broadly saw assets decline.
Investment Adviser Association and National Regulatory Services - Investment Advisory Industry Snapshot. July 2021. Large firms defined as more than $5B in reported assets under management; boutique firms defined as less than $100M in reported assets under management.

Strategic Questions for Emerging RIAs

Against a competitive backdrop that favors large firms, you, as an emerging RIA, need a well-defined strategy for success. That means you need answers to these questions:

  • What is the best way to keep my pipeline full?
  • How can I provide a comprehensive portfolio of services?
  • How can I tap into new niche markets?
  • What is the key to attracting high-net-worth clients?
  • Can I become more efficient in client acquisition?
  • What is the best strategy for advisor recruitment?
  • How should I think about regulatory risk mitigation without home office support?
  • How can I effectively scale?
  • How can I build a collaborative network to generate more creative solutions for my clients’ needs?

We will examine why adopting a growth strategy focused on expanding your practice and delivering specialized services to a diverse demographic can help you answer these questions.

Evidence of a Good Idea

What can we learn from the larger RIA firms? As the chart illustrates, these firms have embraced the concept of providing specialized services.

Results from the 2017 and 2021 RIA Benchmarking Study from Charles Schwab. Results for all firms with $250 million or more in AUM. Past performance is not an indicator of future results. 2021 RIA Benchmarking Study from Charles Schwab, fielded from January-March 2021. Study contains self-reported data from 1,340 firms. Participant firms represent various sizes and business models categorized into 7 peer groups by AUM. 2021.

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