In our previous blog, we highlighted how market pressures like consolidation, new entrants, and fee pressure are impacting RIA, and outlined strategies for growth in the face of these challenges.
Below, we’ll highlight two additional forces that are transforming the RIA landscape and explore strategic approaches for not only adapting, but leveraging these forces for a powerful competitive advantage.
Changing client preferences and expectations
As the RIA industry consolidates into a smaller number of larger firms, many operating at thinner margins, client expectations have risen. More than just investing advice, today’s clients are looking for a holistic approach to their financial well-being. Many need guidance for different aspects of their financial lives, and prefer to have all their financial needs handled under one roof.1
Meeting these increased expectations requires RIAs to wear multiple hats and provide expertise in matters like tax efficiency, estate planning, insurance, home buying, college planning, retirement planning, and healthcare.
Yet while advisors are expected to deliver more services, time is scarce. Studies show many advisors already have their hands full with investment management and administrative tasks.4 This leaves less time for revenue-generating activities like acquiring new clients and growing existing relationships.
Digitization of wealth management and technology emergence
Competing against larger players in the RIA space and meeting clients’ needs for more services may seem impossible to overworked advisors, but technology can be the great enabler. Connected wealth management platforms and tools are empowering RIAs to not only better support current clients – but also to scale and grow their practices.
Many RIA clients even expect advisors to use digital technology for making investment decisions with them.5 Gen X and millennial clients in particular (and prospective employees as well) are accustomed to using technology for communicating, collaborating, and seeing a unified view of holdings.
A number of recent studies show that RIAs that embrace technology report better client experiences, higher advisor satisfaction, and more assets under management.6 By using technology to save time in areas like account maintenance, money movement, trading, portfolio rebalancing, financial planning, customer onboarding, and routine back office tasks, digitally empowered advisors can focus on deepening client relationships.
In addition to reducing administrative work, RIAs are using technology to generate valuable AI-driven insights based on customers’ needs and financial health. This allows advisors to deliver meaningful product and service recommendations to a larger client base and provide the personalized experiences today’s clients expect and deserve.
Enhancing your roadmap for client success
By being prepared, RIAs can position themselves to thrive amidst evolving technology and rising client expectations. Here are a few ideas to help future-proof your RIA practice:
Expand your offerings and affiliations
If you’re providing the same services you were 10 years ago, you’ll want to look at where you can increase your capabilities. Consider adding services around trust and estate planning, taxes, life insurance, home buying, college planning, and more, to attract new clients and deepen existing relationships. Instead of growing expertise in house, explore adopting a team-based approach and partnering with other firms to augment your offerings and open new doors.
Shift from financial advisor to financial coach
How do you market yourself and your firm? Advisors today are often viewed as integrated life/wealth coaches who advise on financial matters related to life milestones and more. You want your clients to see you as the central hub in their financial ecosystem. By expanding your offerings and gaining clearer view of clients’ financial lives, you’re in a better position to offer meaningful advice and guidance.
Invest in tech
Enhance and update your digital experience to meet client expectations and improve operational efficiency. Select the right technology partner who can help you leverage personalization at scale offerings, AI-driven tools, advanced analytics, competitive intelligence, portfolio management, and digital advice.
Double down on capturing a more diverse client base
Growth-oriented firms must prioritize attracting and retaining younger clients – and integrating modern client portals and mobile apps is key for engaging these digitally native clients. Offering a subscription fee structure can also be a selling point for younger demographics and can enable advisors to grow with these clients as their financial needs evolve.
Be the future of wealth management with Envestnet
Increased client expectations and rapid technological advances can make it challenging to conduct business the traditional way. But by viewing these trends as opportunities and redefining business practices, RIAs can gain a critical edge. At Envestnet, we’re here to help. Our innovative tools and services are designed to help you capitalize on opportunities, boost your competitive advantage, and drive business growth for the long term. Learn more with our white paper: Top 5 Trends to Power Your Practice
See firsthand how Envestnet can help elevate your RIA Practice. Visit: envestnet.com/ria.
