Independent RIAs (Registered Investment Advisors) have increased significantly in recent years, driven largely by the introduction of new technology and by the changing profile of today’s investors. Advisors who first broke away from traditional wirehouses helped to set in motion a trend in increased sovereignty within financial services, for both advisors and clients, as demand for greater personalization and control in portfolio management began to increase. According to a recent report by Cerulli Associates, RIAs experienced the strongest growth among the independent channels in 2013, increasing more than 17% in total assets to $1.67 trillion.
With the rise of independent RIAs, tools in portfolio management, customer relationship management (CRM) and financial planning have been reimagined and reworked to fit the needs of advisors working outside of the wirehouse framework. Technology has helped fill this gap in countless ways – particularly through the growth of new digital channels, which have enabled advisors to support clients’ need for anytime, anywhere access to advisor services. The services and solutions of today will continue to evolve, as advisors continue to pursue opportunities to break away from traditional institutions in favor of the independent space.
Furthermore, the rapid growth of robo-advisors has made technology investment even more important for independent RIAs, as those who fail to keep pace with today’s digital wealth management strategies risk falling behind the innovation curve. In today’s fast-paced market, the advisor-client relationship can be a challenge to maintain – especially when clients’ needs, which have shifted toward more personalization and transparency in their account management, are not being fully met.
For some advisors, today’s competitive market is too difficult of a challenge to be handled independently. For example, with increased competition for clients, marketing tactics take on greater importance, yet these added costs can further cut into profits. These expenses will only become more urgent as baby boomers retire and investors demand more sophisticated technology from their advisors.
According to Cerulli, many advisors who are looking to move into a more independent role yet lack the operational resources to do so successfully are instead transitioning toward dually registered practice owners, which enable them to engage with a well-established firm while also developing a credible, stand-alone identity. The dually registered model has historically been considered a short-term stopover for advisors transitioning between the IBD and pure RIA models, but according to Cerulli, it may be a more permanent landing pad, given the benefits it brings to advisors in the long-term.
Overall, technology has played a key role in both the rise of the independent advisor and in the operational trends that have emerged among advisors and clients. Scivantage Portfolio Director, available as both a Web and Desktop-based platform, is one example of portfolio management software for financial advisors at all levels and practice structures, as it offers the critical tools needed for full integration into a digital-based model of client support.