The world of investing is constantly changing, not least among elite advisories.
A study by BlackRock and InvestmentNews Research recently found some interesting emerging trends among elite registered investment advisors (RIAs) in the United States. What do we mean by “elite”? The status is determined by the assets under management (more than $250 million) and how productive the firm is (ranked in the top half of the surveyed).
We found that the success of elite RIAs is strongly correlated with the growth and retention of existing clients; 62% of survey respondents called this a driver of success, making it the most often cited factor. Although investment advisors of all sizes care about their customers, 83% of elite RIAs ranked “client satisfaction” as a top priority of the firm, compared with 72% of other RIAs.
Team up to give customers more attention
A growing trend is the practice of “teaming,” in which clients are assigned a team of advisors and support staff rather than only one point person. This is helpful because it gives greater flexibility to the account’s primary financial advisors while also giving clients more points of contact who can answer questions and discuss concerns at a moment’s notice.
We also see this emphasis on customer care and personal touch with the way elite RIAs handle client assets: 73% of elite RIAs have dedicated in-house staff committed to building and maintaining custom portfolios for each client, compared to 54% of other RIAs.
Put technology to use
Another key trend that I’ve been keeping an eye on is the rise of technology, and it seems like RIAs are becoming more comfortable with robo advisors. Last year, almost 20% of the surveyed viewed robo advice as a threat to their businesses, while 39% saw robo technology as an opportunity. This year’s study was significantly more optimistic: Only 14% saw robos as a threat, while nearly half saw them as an opportunity.
Technology seems destined to play an ever-greater role in financial advice. At the time of this study, only 8% of the firms we surveyed offered robo platforms. But, 24% of those that don’t currently have a robo platform plan to offer one within the next year or two. When asked, many said the main benefit of having a robo platform is to attract new clients, especially younger customers.
While robo advisories have gained traction in the last few years, the thing that strikes me the most is the changed advisor attitude. I find it encouraging that more advisors are embracing the idea that tech offerings are a good complement to financial advice and customer care—and that tech alone isn’t enough. More believe that technology can help them better customize their services to client needs. These are the same conclusions that Joe Duran (United Capital) and I came to last month: Advisors need to become bionic and make technology work for them. We see financial advice going digital, mobile, collaborative, on demand and 24/7.
The future is always unknown, but we’re excited about the innovations that technology affords, especially when it helps us serve our clients better. In the past year alone, RIAs have improved their capabilities and adapted in a way that is forward-looking and encouraging. More and more hands-on, personalized financial care seems to be on its way.