RIA distribution: 3 things we can expect in 2019 and beyond

The RIA market is frequently touted as being different. But is it really that different from other channels of wealth management? Yes, there are cultural nuances and differences for every single RIA firm and yes, there are business and ownership considerations RIAs have that broker/dealer affiliated advisors do not. However, delivering holistic financial planning and advice does not vary by channel for fiduciary-minded (and mandated) individuals and teams.

There are plenty of broker/dealer affiliated financial advisors also acting as Fiduciaries. They, like RIAs, face similar challenges including, but not limited to:

• Projecting their core value propositions
• Delivering robust portfolio solutions
• Efficiently building their book of business
• Effectively managing client relationships through modern means of engagement

The RIA market is facing the same disruption and challenges being felt across the wealth management industry. The future of the entire wealth management market will be defined by increased personalization and the integration of advanced technology and automation, which we discuss in more depth in our latest whitepaper.

So what does this mean for asset managers with a presence, or an ambition to build a presence, in the RIA channel? Without a doubt, RIA distribution teams are facing a challenging environment moving forward. But should they treat the RIA market differently than the broader wealth management market? The answer to that is nuanced, but simply put - the answer is both Yes and No. In the face of these challenges we can expect RIA distribution to make a splash in the following ways:

1. Segmentation of the Market. The RIA market will be treated somewhat differently than the broader market mostly due to availability and transparency of data. Any sound segmentation strategy will be built off robust advisor-level data; but in the absence of data or certain data points, the segmentation of RIAs cannot always follow the same model of the broader market. Given the relatively lower number of dedicated RIA sales resources, the formulation and validation of a sound segmentation strategy is central to success across all corners of the market. A small team of sales representatives will struggle to form meaningful relationships with 1,000 let alone the 30,000+ and growing number of RIA firms. Thus, segmentation and a digital strategy for each segment are critical to efficiently and effectively reach all corners of the market (or at least the corners firms want to reach). The large RIAs are well known and will be well covered from a sales and relationship management perspective. But for everyone else, an effective sales enablement strategy built on sound segmentation is the key to success.
2. Spending Money in the Right Way. As margins continue to erode, asset managers can expect to spend more time rethinking how they allocate their budgets. This means RIA sales teams already strapped for cash will need to be even more diligent with their budgets. Buying space at an industry or distribution partner event is typically a good way to generate awareness and leads, but more and more sales executives are questioning if they are getting enough out of these events. Attendees at our latest RIA Roundtable Event agreed that attending events and building relationships with the ever-elusive RIA is great for building a handful of relationships, but can be a little too narrow. We expect to see leading RIA distribution teams investing in technology to improve distribution analytics, sales workflows and engagement for the RIA channel in order to optimize reach and effectively leverage existing resources and budget.
3. Expanding Digital Engagement. Leading RIA distribution organizations will build their market footprint without the need for face-to-face engagement. This will involve a focused digital engagement strategy and utilize a technology-driven sales enablement strategy that will automate content generation and delivery, progress and inform next steps through artificial intelligence, and optimize engagement with an RIA when the time comes for human interaction. A holistic relationship with RIAs throughout the customer journey (i.e. the customer lifetime cycle) that combines technology-driven digital engagement with a human touch is essential to meeting the ubiquitous expectation of personal communication. While a face-to-face meeting might help close a deal, it's the time and engagement beforehand that separate the winners from the losers.

To learn more about our research and recommendations on tackling the current distribution challenges, please contact me with your questions.

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RIA , Digital Engagement , distribution , RIA sales