RIAs are winning. No. Wait. Wirehouses are winning more assets, but RIAs are growing faster. Well, nevermind. It’s tough to tell these days. But whoever the winner is, there’s no doubt both industries are striving for the same things: clients, assets and talent.
This morning, 23 January, about a dozen RIAs gathered for a workshop at the Four Seasons in New York. One of their concerns included increasing competition from wirehouse reps that are positioning themselves as advisors—making the race for clients tougher. Philip Palaveev, a principal at Moss Adams, told the audience they may have to differentiate themselves in other ways, like firm culture. Besides, “the first thing investors think about when they’re shopping around for an advisor is trust,” he added.
Perhaps the biggest challenge advisors will face (both RIAs and wirehouse reps) is the search for talented advisors. The search, he says, is getting more difficult and more expensive. To alleviate the cost and effort, advisors would be wise to look beyond competitors and recruit from colleges instead, he says.
The bottom line is advisors should have enough people on board to maintain client growth. According to Palaveev, 50 percent of the RIA industry’s growth over the last five to six years came in 2004. “People were ready to put their money back in the market. The fastest growing firms grew 60 to 70 percent that year,” he says. Those firms with stagnant growth didn’t have the capacity for it. “They didn’t have enough people to answer the door when clients knocked,” he says.