I had the privilege of attending and serving as a panelist at the recent WealthManagement EDGE conference at The Diplomat Beach Resort in Hollywood, Fla. The conference, an integration of three events (Inside ETFs, WealthStack and RIA Edge), facilitated discussions on the breadth and depth of content that RIA leaders must proactively manage when charting the best path forward to serve their clients and grow their business: investment management, financial planning, client & advisor experience, organic & inorganic growth, technology, operations and talent management, to name a few. The conference also featured a broad aggregation of sponsors and exhibitors who enthusiastically showcased their products and services to key decision-makers from the industry. I left the conference with three key themes from the perspective of an RIA firm and where RIA firms need to focus.
First, the advisor-client relationship is here to stay. With the continued emergence of digitization in the wealth management space, such as robo-advisory technology and artificial intelligence, the long-term viability and impact of the human advisor have regularly come into question over the past few years. No matter how powerful and impressive technology becomes, the concerns that clients have when it comes to their financial well-being occur at a very human and often emotional level. Therefore, clients seek guidance, trust, perspective and empathy from their advisors that meets them at this human level. The advisor-client conversation has also transitioned from a generic, “let’s set you up for retirement,” which could be decades from now, to a more dynamic, personalized, ongoing journey of short-term and long-term goals that clients need financial resources to achieve. Clients want to feel reassured, secure and confident in their financial decisions, and human advisors are best equipped to deliver these responses to clients.
Second, RIA firms must continuously craft a value proposition that enables advisors to deliver the human experience in an engaging, personalized, and scalable manner. To accomplish this, firms should perform a client segmentation exercise to define the scope of products and services that enable advisors to uphold their fiduciary duty to clients while simultaneously running and growing a profitable business.
Client segmentation helps to crystallize how RIA firms deliver this experience to clients and determine necessary resources and skill-sets. It also helps determine how to leverage technology to scale and digitize processes, improve efficiencies and remove friction and speed bumps from the entire client and internal advisor experience. RIA firms should frequently view metrics and KPIs to measure the efficacy of their value proposition, client experience, and processes and proactively make changes when needed.
Third, RIA firms need to focus on talent management strategically. Employees should clearly understand how they deliver the firm’s value proposition to their clients. RIA firms should define clear roles and responsibilities and establish career paths to provide clear advancement opportunities. Attracting and retaining talent is a critical factor of success for advisors. Think about your last visit to your dentist’s office as an analogy. The chances are high that one individual greeted you at reception and handled the administrative aspects of the visit. Then, a hygienist took the X-rays of your teeth and performed the cleaning. Finally, the dentist performed a quick check-up and asked if you had any questions. During your visit, the dentist was most likely making the rounds with other patients or performing more complex dental procedures. By creating a team-based approach, the dentist can maximize the value of where the time is spent while tasking others on the team to handle the remaining aspects of the client experience.
Similarly, having a team of talented individuals creates more capacity for advisors to practice at the top of their licenses. It creates a distributed approach to delivering services to clients efficiently, without bottlenecks, through clearly defined roles and responsibilities. Retaining the best talent helps to ensure continuity of excellent service to clients with whom they have built a strong rapport and establishes continuity of knowledge of processes and technology. Turnover of employees is expensive and disruptive. It requires having to find replacement candidates, often at a more expensive cost, and then training new hires on process and technology. Maintaining a strong team also helps ensure generational continuity, both in creating experiences that resonate with the next generation of existing clients and for opportunities for advisors to consider for succession planning.
The rapid evolution of the wealth management industry is impossible for RIA firms to ignore. Conferences such as WealthManagement EDGE provide advisors and leaders with an engaging forum to discuss the ongoing complex breadth and depth of essential topics. By continuously focusing on delivering the maximum value of the advisor-client relationship through an impactful experience supported by optimal processes, technology, and personnel, RIA firms set themselves up with the best chance for success in serving clients and growing their business.
Vib Arya is the chief operating officer of Shufro Rose, an RIA in New York City.