Phill Rogerson, Head of the RIA channel at Envestnet, joined Keith Black, Managing Director of RIA Channel, to discuss three trends driving today’s RIA business.
Rogerson notes that consolidation, changing consumer preferences, and the need for advisors to increase their scale are three key trends affecting advisors today.
First, Rogerson notes that the size of RIA firms has more than doubled over the last six years, including the number of advisors with over $1 billion and over $5 billion in assets. Larger firms have more capital and more resources. This consolidation has resulted in the largest 9% of advisory firms controlling 75% of client assets.
Second, consumer preferences are changing toward a preference for a one-stop shop that can offer personalization at scale. These two trends are driving advisors toward a third trend, which requires them to leverage technology to grow their scale, ideally allowing individual advisors to serve at least 50% more clients. Given those trends, RIAs need to select the right technology partner. Each firm has different internal capabilities and different needs in their technology providers.
As the largest generational wealth transfer in the history of mankind has already started, advisors need to find ways to engage with younger investors. Retirement planning, digital engagement tools, and online planning capabilities are key ways to reach the next generation.
Customization and personalization can add value to clients, especially in the areas of tax strategies and custom portfolios. Today’s technology allows for year-round tax planning by tracking household-wide unrealized capital gains and losses. Technology is also enabling larger portfolios, which can bring direct indexing services and the benefits of owning individual securities to clients without additional effort from the advisor.
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