- How RIAs manage portfolios and the changing nature of their use of passive and active investments
- The ways RIAs anticipate their role and needs will be changing including the critical challenges they expect to face
- The forms of wholesaling and sales support that are most useful to interact with RIAs
- How RIAs use web-based and digital capabilities from key sources and what enhancements to support are most important
- RIAs leverage of value add and practice management resources and characteristics of best-in-class provider capabilities
How RIAs Manage Client Portfolios
- Which investment vehicles do RIAs prefer to use in building portfolios and how do they expect to adjust their approach to managing fixed income assets in the near-term?
- How do RIAs use active vs. passive investment management and for which categories do RIAs prefer passive solutions?
- What forms of support related to portfolio construction are most important to RIAs and what enhancements do they desire?
Changing Role of RIAs
- What do RIAs perceive as the key challenges and risks to meeting client needs going forward?
- What functions do RIAs view as most crucial for additional support and how do they expect their practice will change?
- How do RIAs typically position their role to clients and what do they believe will have most impact in the future?
RIAs Engaging with Wholesalers
- How willing are RIAs to engage with wholesalers and what forms of interaction do RIAs prefer?
- What do RIAs consider wholesalers do best and which forms of contact are most likely to cause RIAs to act?
- To what extent is technology-based wholesaling supplanting in-person contact for RIAs?
RIAs Use of Web and Digital Support
- What specific actions are RIAs most likely to perform using product provider web and digital support?
- What are the key barriers to RIAs greater use of digital support and what changes do they desire most?
- How satisfied are RIAs with websites from product providers and how does this support compare to best-in-class capabilities?
RIAs Use of Value Add and Practice Management Support
- Which key sources do RIAs rely on for value add support and what characterizes the most useful capabilities?
- What changes do RIAs anticipate would improve the usefulness of value add and practice management support?
- How has RIAs access to and use of value add and practice management support changed in the past year?
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Introduction and MethodologyPure fee-based Registered Investment Advisors (RIAs) offer significant opportunity for many product distributors, platforms, and providers, yet remain a challenging audience to serve. Asset managers, insurance companies, custodians, and other information and service firms consider RIAs an important target market given the accelerated growth and activity of these advisors. However, RIAs have preferences and requirements that make them more demanding to serve and satisfy. Practical Perspectives has highlighted many of the different behaviors and attitudes of fee-based RIAs in our proprietary research reports covering critical strategic and marketing/sales subjects. In this new updated report, we build on prior studies to share a detailed examination of fee-based RIAs, specifically those unaffiliated with a broker dealer. Our goal is to provide product providers, distributors, and platforms with insights and implications related to several strategic and tactical questions involving RIAs including:
- How can providers respond to key trends in how RIAs manage portfolios, including their approach to constructing portfolios and use of active and passive investments?
- How is the role of RIAs changing and what are the key challenges, risks, and needs of RIAs going forward?
- How do RIAs engage with wholesaling outreach from product and service providers and what best sales practices are successful with RIAs?
- How can web-based and digital capabilities be used to more effectively serve RIAs?
- What are the most effective value add and practice management strategies to deepen relationships and commitment from RIAs?
The singular orientation of this report provides in-depth perspective that can enhance the business development, product, sales, marketing, and overall support offered to RIAs by firms targeting these advisors. Our research has consistently underscored several differentiating characteristics and behaviors of fee-based RIAs which include:
• They are entrepreneurial business people who value control, flexibility, and independence
• Typically serve affluent clients, with higher minimums and higher average account balances than other advisors
• Greater propensity to function in teams although many solo practices exist…teams may include functional expertise or centralized approaches to portfolio management and other solutions
• More technology sophistication and usage, with higher willingness to leverage digital tools across their practices
• Typically deliver a wider variety of services to clients that go beyond investment management to include activities such as holistic planning…although a subgroup of RIAs are investment-only focused
• High confidence in their ability to serve and support end-user clients
• Less receptive to traditional marketing and sales efforts from product providers, especially wholesaling
• Greater desire for objective, unbiased information that shares insights to assess the pros/cons of using various solutions…many are highly analytical in their decision-making approach
• Fiduciary standard underscores their relationship with clients and providers, with cost and tangible benefits key drivers of the solutions they tend to use
• Orient to providers that align with their needs, especially those with low cost solutions, flexible support, transparency, and commitment to RIAs
In some sections of this report, fee-based RIAs are compared to broker dealer advisors as a point of reference and differentiation. These include advisors affiliated with independent broker dealers (Independent channel) and those advisors from wirehouse, regional, and national employer-based broker dealers (Full Service). Advisors who are dually registered and function within an Independent or Full Service environment (i.e. do both fee-based and brokerage business) are not considered within the pure RIA segment addressed in this report.
Table of Contents
Section I: Executive Summary
Section II: Introduction and Methodology
Section III: How RIAs Construct Portfolios
A. How do RIAs typically make portfolio construction decisions?
B. Which sources have the most significant influence on how RIAs construct portfolios?
C. How do RIAs use model portfolios to guide investment decisions?
D. How confident are RIAs in managing portfolios and what asset classes do they consider as having greater risk in the near-term?
E. How is RIAs use of different investment solutions expected to change in the coming year?
F. What vehicles do RIAs rely on most for fixed income investing?
G. What do RIAs anticipate as the key challenges going forward in managing fixed income assets?
H. What approaches are RIAs most likely to adopt to address key challenges in managing fixed income assets going forward?
I. How oriented are RIAs to using active and passive investments in constructing portfolios?
J. How is RIAs use of active and passive management likely to evolve in the coming year?
K. How broadly do RIAs use passively managed solutions?
L. For which equity and fixed income categories do RIAs prefer to use passive versus active management?
M. What forms of support from product providers related to portfolio construction are most important to RIAs?
N. To what extent do RIAs need support for key portfolio construction activities?
O. What enhancements would benefit RIAs ability to construct portfolios?
Section IV: The Changing Role of RIAs
A. How do RIAs typically position their support to clients and prospects?
B. How well prepared are RIAs to serve existing and prospective clients?
C. What do RIAs perceive as the key challenges and risks to meeting client needs going forward?
D. What aspects of their practice do RIAs view as most crucial for additional support going forward?
E. Who do RIAs expect will be their primary client going forward?
F. How do RIAs expect their practice will change going forward?
G. When do RIAs expect to no longer be active full-time advisors?
Section V: RIAs Engaging with Wholesalers
A. How valuable is wholesaling to RIAs and how willing are they to engage with wholesalers?
B. How many contacts from wholesalers do RIAs receive and how do they perceive the volume of contact from key sources?
C. What are the most typical forms of wholesaling outreach directed to RIAs?
D. On which aspects of RIAs actions do wholesalers have the most significant impact?
E. What do RIAs consider wholesalers do best?
F. How have RIAs interactions with wholesalers changed in the past year?
G. Do RIAs prefer a specialist wholesaler or a generalist approach to wholesaling?
H. Is effective wholesaling outreach to RIAs related to the firm or the individual wholesaler?
I. To what extent are technology-based wholesaling approaches supplanting in-person contacts for RIAs and how receptive are they to these approaches?
J. What characteristics define the most useful wholesalers for RIAs?
K. What changes would increase the usefulness and impact of wholesaling to RIAs?
L. Which forms of wholesaling outreach are most likely to cause RIAs to take subsequent action?
M. What specific actions do RIAs typically take through interactions with wholesalers?
Section VI: RIAs Engagement with Web and Digital Support from Product Providers
A. To what extent do RIAs rely on various sources including asset managers and insurance providers for digital and web support?
B. How dependent are RIAs on websites and digital support from asset managers or insurance providers when conducting key activities within their practice?
C. What means do RIAs use to access digital and web support from product providers?
D. To what extent do RIAs rely on product provider websites and digital support that are restricted or specifically designed for advisors?
E. What activities do RIAs perform through digital and web support available from product providers?
F. How do activities RIAs perform through computer or desktop tools compare to actions done using mobile devices?
G. How has RIAs use of web and digital support from product providers changed in the past 12 months?
H. How satisfied are RIAs with digital and web support from product providers?
I. How does digital and web support from product providers compare to best-in-class sources outside the financial services industry?
J. What key barriers or challenges do RIAs encounter in using digital and web based support from product providers?
K. What do RIAs consider the characteristics of the most useful and least useful web and digital support from product providers?
L. What changes do RIAs desire to improve the usefulness of digital and web support from product providers?
Section VII: How RIAs Use Value Add and Practice Management Support
A. Which key sources do RIAs rely on most often for value add and practice management support?
B. How has RIAs access and use of value add and practice management support changed recently?
C. To what extent is technology-based value add and practice management support supplanting in-person delivery and which ways of delivering capabilities are most useful to RIAs?
D. What types of value add and practice management support are most useful to RIAs?
E. What factors characterize the value add and practice management support RIAs use most often?
F. What changes can improve the usefulness of value add and practice management support to RIAs?
G. What factors characterize the value add and practice management support RIAs use most often?
H. Which aspects of running a practice are most challenging for RIAs?
I. For which topic areas are RIAs most interested in receiving additional value add and practice management support?
J. What are RIAs most significant unprompted needs regarding additional support in the next 12 to 24 months?
Section VIII: Implications and Outlook