With rapid growth and shifting market conditions, comes rapid change. From industry consolidation, to emerging new entrants, to rising client expectations for overall financial well-being. Registered Investment Advisors (RIAs) have the opportunity to rethink and redefine their business model for long-term organic growth through the lens of these key trends. These trends highlight the strategies that will shape RIA firm success in the coming years.
1. Shifting client expectations & preferences
Which sounds more appealing: solving just one of your financial problems, or solving all of them? Clients want more than just investment management and asset management from their advisor-client relationship–they want guidance with all aspects of their financial lives. 91% of wealthy clients say they wish their advisor offered estate planning advice, yet only 22% say they are actually receiving this service.1 This gap in client services will only continue to grow as your client base demographics shift.
By adding services like estate planning, insurance, and tax efficiency to their rosters, firms can deepen client relationships and enhance their value propositions while attracting more clients.
2. RIA fee compression
In the past few years, we’ve seen an emergence of personal finance management and new robo-advisors entrants serving more clients for less. These factors are putting downward pressure on advisor fees. So, what is the solution? Advisors who incorporate additional services like tax and estate planning, banking and lending advice, succession planning and even life insurance planning into their practices have a better opportunity to justify an increase in fees. If you do more, you can charge more. We’ve seen this with financial planning, where 90% of financial advisors are now charging for financial planning services. That number is growing–much like the number of RIAs using billing software for RIAs to streamline operations and reduce costs.
3. Acquisitions and consolidation in the RIA space
Mergers and acquisitions in the RIA channel continue unabated for years. According to Cerulli, RIAs with billions in assets under management (AUM) have more than doubled their firm market share in the last ten years. In fact, 9% of the largest advisory firms control 73% of assets in the marketplace.2
Drivers of this rampant M&A market consolidation include tighter profit margins, and increased competition against firms flush with resources and capital.
4. Digitization and technology
Technology is a great enabler. RIAs that leverage the right technology can increase their firms’ revenue, all while minimizing costs and resources. Wealth management technology helps advisors save time in areas like account maintenance, money movement, trading, portfolio rebalancing, financial planning, and customer onboarding. These time savings are only exacerbated by the emergence of robotics and AI. These are the engines that allow firms to reduce administrative tasks and remain profitable with fee compression. Embracing digitization of the RIA industry enables advisors to operate more efficiently, automate routine tasks, provide deeper insights, and make better decisions. With these digital tools, advisors can focus more on building long-term client relationships, delivering personalized advice that aligns with their clients' evolving needs.
Strategies for RIAs to adapt to industry changes
To successfully navigate industry changes and drive growth, RIAs should focus on leveraging technology, expanding their service offerings, and personalizing client experiences. These approaches will help RIAs adapt to shifting market conditions and meet the rising expectations of their clients.
- Become a financial coach. Behavioral coaching is designed to help clients navigate the emotional and psychological aspects of their financial lives. Use your knowledge to guide clients to adopt healthier financial habits by understanding and counteracting cognitive biases that can lead to impulsive decisions or procrastination.
- Link financial planning to execution. Transform a well-crafted financial plan into concrete, actionable investment strategies and solutions. This plan-to-platform process ensures that financial insights are effectively translated into real-world actions that align with a client's goals and aspirations.
- Adopt new RIA technologies. Enhance and update your digital experience to meet client expectations and improve operational efficiency. Leverage AI-driven tools, advanced analytics, competitive intelligence, and digital advice to scale your offerings and allow advisors to focus on client relationships.
- Expand service offerings: Incorporate a wider range of services such as tax planning, estate management, and succession planning to provide a comprehensive, one-stop solution for clients. Offering these additional services ensures a holistic approach to wealth management that meets evolving client needs. Consider involving top-tier specialists or even joining forces with your peers to provide additional support for complex financial needs.
- Personalize client portfolios: Use personalization strategies to tailor investment portfolios and financial plans to each client's unique goals and preferences. By focusing on individual needs, RIAs can foster stronger relationships and drive long-term client loyalty.
These strategies—bolstered by a wealth management platform—can help RIAs navigate industry changes and drive growth in the coming years.
Grow your practice in 2025
Our unique technology platform is designed to help RIAs operate more efficiently while delivering a superior level of service to clients. Today, more than 2,700 independent RIA firms are using our solutions, who collectively manage over $1.9 trillion in assets. See firsthand how Envestnet can help your RIA practice at Envestnet.com/RIA.
Download 5 Top RIA Trends to Power Your Practice to access the data behind these trends and more strategies for future-proofing your RIA practice.
