Displaying items by tag: wealth management

According to Echelon Insights, 2024 will be another strong year for M&A activity with larger RIAs picking up smaller firms. This follows a strong year for the industry in 2023 despite headwinds such as higher borrowing costs which impacted buyers’ ability to impact financing. Yet, the robustness of M&A in less than ideal conditions reveals strong fundamentals.

 

In 2023, there were more than 320 deals for RIAs. It was the second-highest year on record other than 2022 which saw 342 deals. Over the last 5 years, the number of deals in the space have grown at a 12.1% annual compounded rate. Average assets per transaction was up 4%, while private equity was the most aggressive acquirer. In total, the sector was involved in 71% of deals and added cumulative assets of $466 billion.

 

Last year, the largest transactions in terms of asset size were Captrust and Cetera Financial Group. Cetera acquired Avanax for $1.2 billion to bolster its succession planning offerings and tax and wealth management capabilities. Captrust acquired Trutina Financial for $1.1 billion and had a total of 8 deals, adding $14 billion in assets. 


Finsum: Research firm Echelon Insights is forecasting another strong year for RIA M&A activity in 2024. 2023 had the second-most number of deals, despite several macro headwinds. 

 

Published in Wealth Management
Thursday, 04 January 2024 06:53

Effective Lead Generation Strategies

Building an effective lead generation strategy is essential for advisors who are serious about growth. According to Angela Osborne, the COO of Bluespring Wealth Partners, advisors should focus on generating referrals from existing clients and working on leads that are already in the pipeline. Failure to do so runs the risk of becoming a ‘melting iceberg’ which is a firm with no growth strategy that loses clients and assets through time and attrition.

 

She recommends being clear with prospects about the value being offered in addition to what differentiates you from competitors. And this branding should be consistent across all the mediums where you want to share your message. Additionally, the message should resonate with your ideal client. 

 

In terms of optimizing lead generation, she recommends having a digital marketing strategy. Advisors should also refine their messaging to quickly and clearly articulate why clients should choose them over their competitors. Once a lead is acquired, it must be nurtured which takes time in order to build an authentic relationship. 

 

The final step is to actually convert a lead into a client. Many advisors fail at this final step. She recommends identifying who in the company does this well and have them mentor others at the firm. 


Finsum: Without an effective lead generation strategy, RIAs are bound to become ‘melting icebergs’ as they lose clients and assets through time and attrition. 

 

Published in Wealth Management
Friday, 22 December 2023 17:14

Independent, Hybrid RIAs Seeing Most Growth

According to a study from Cerulli Associates, independent and hybrid RIAs are seeing the most growth in advisor headcount compared to other channels. This same trend is evident across larger time frames as well and an indication that independence is an enticement for advisors. 

 

Over the last decade, the number of independent RIAs has grown by a 2.4% annual rate, while the number of advisors working at independent RIAs has increased by an annual rate of 5.2%. Over the next 5 years, total advisor headcount is projected to remain flat, but independent and hybrid RIAs are forecast to see more gains in advisor headcount. And independent and hybrid firms are projected to control 31% of intermediary market share by 2027.

 

Some of the reasons that independent and hybrid RIAs may appeal to advisors are more flexibility and higher payout percentages. In contrast, the more established firms offer the leverage of corporate scale in addition to access to technology, training, and resources. 

 

A survey by Fidelity of advisors in October had similar findings. Over the past 5 years, 1 out of 6 advisors had switched firms. Independent RIAs were the top destination. 94% of advisors who switched firms were happy with the decision, and 80% reported growth in assets under management. 


Finsum: Independent and hybrid RIAs are seeing continued growth in terms of advisor headcount at a time when total growth in headcount for the industry is flat. 

 

Published in Wealth Management
Friday, 22 December 2023 06:39

Building an Effective Client Service Model

Success for a financial advisor is dependent on attracting and retaining clients. The key is to create an incredible client service model to deliver an experience for clients that surpasses their expectations. 

 

The client service model is your holistic plan for how you will engage with clients. It starts with the onboarding process and has to make clients feel comfortable and trust in your expertise. At all steps, advisors should constantly deliver value while fostering engagement. The latter is key to retention and can also lead to referrals down the line. 

 

The first step is to imagine the experience through your clients’ perspective. For this, you must specify your target market and define the ideal client. Think carefully about your clients’ pain points, and what would prevent them from working with you. 

 

Next, you need to consider the client journey. As they move through different stages of their life, their needs and goals will evolve. This will shape the advice and services you offer. Some common steps are onboarding, initial planning, regular reviews, and a consistent communication strategy. 

 

Finally, it’s important to remain consistent in all your appearances and interactions with clients. Ultimately, the purpose of a client service model is to ensure the delivery of a meaningful experience to clients at all steps and through all channels.


Finsum: Building an effective client service model is an invaluable asset when it comes to attracting and retaining clients. Here’s some tips on getting started.

 

Published in Wealth Management
Wednesday, 20 December 2023 03:06

Regulators Stepping Up Reg BI Enforcement

Over the last couple of months, there has been an increase in the enforcement of Regulation Best Interest (Reg BI). Over the last year, the number of actions taken by the SEC and FINRA have substantially increased. It’s consistent with warnings from regulators that there would be a ‘more substantive’ period of enforcement and that Reg BI will be enforced ‘to the letter’.

 

Regulators want to see a more robust process to ensure supervision of brokers. The ultimate goal of Reg BI is to ensure that all recommendations are made in the clients’ best interests.  So far this year, there have been 22 FINRA enforcement actions after just 8 in 2022. Penalties are also growing in size as evidenced by an SEC settlement with Laidlaw and Company for $800,000.

 

Recent enforcement has also seen advisors having to pay back a portion of customers’ losses. This is a departure from precedent when firms were typically on the hook for compensation and indicates a serious commitment to deterring misconduct. 

 

In 2024, even more enforcement is expected given public comments from SEC and FINRA officials. They see enforcement expanding across all 4 pillars of Reg BI which include disclosures, care obligation, conflicts of interest, and compliance. 


Finsum: The SEC and FINRA are increasing enforcement of Reg BI. They are also looking to fine individual advisors and brokers for misconduct.

 

Published in Wealth Management
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